WASHINGTON — The Internal Revenue Service has issued a proposalstating investment management and advisory fees paid by trusts andestates should be deductible only when they exceed 2% of thetrust's adjusted gross income.
|The proposed regulation comes as the U.S. Supreme Court preps toreview the current law in Rudkin Testamentary Trust v. Commissionerwhen it reconvenes in October. In that case, the 2nd U.S. Circuitof Appeals in New York ruled expenses not subject to the 2% ruleare those that could not have been incurred by an individual.
|Some industry watchers have argued that any investment advisoryexpenses that can be incurred by individuals would have to use the2% rule. Still, the IRS applied this same explanation in itsproposal stating that the only trust and estate fees that can befully deductible are those that are unique to a trust.
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