Guidance on Unbundling Trustee Fees Extended

By Alistair M. Nevius, J.D.

From the IRS

The IRS announced that it is extending interim guidance on the treatment of investment advisory fees and other costs subject to the 2% floor under Sec. 67(a) (Notice 2011-37). Under the notice, nongrantor trusts and estates will not be required to unbundle their fiduciary fees to determine what portion is subject to the 2% threshold for itemized deductions. Instead, taxpayers will be allowed to deduct the full amount of bundled fiduciary fees without regard to the 2% floor.

The notice extends treatment that was originally issued in Notice 2008-32, effective for tax years beginning before January 1, 2008. Subsequent notices extended the treatment to years beginning before January 1, 2009, and then January 1, 2010. Notice 2011-37 abandons the approach of extending the treatment one year at a time and extends it to any tax year beginning before the date final regulations under Regs. Sec. 1.67-4 are published in the Federal Register.

The IRS and Treasury intend to conform the regulations to the Supreme Court’s decision in Michael J. Knight, Trustee of William L. Rudkin Testamentary Trust, 552 U.S. 181 (2008), but so far have not done so.

Newsletter Articles


Directions in Individual Taxation

This article covers recent developments in the area of individual taxation, including the treatment of support payments and IRA and qualified plan distributions, the Sec. 469 material participation rules, and the taxability of state economic development credits.


2015 Tax Software Survey

See how nearly 5,000 paid CPA tax preparers rated the strengths and weakness of major tax preparation software products they used in 2015.