Investment fees paid by trust not subject to 2% floor.An irrevocable trust Irrevocable Trust A trust that, once its setup, cannot be changed at all. Notes: This is to prevent fraudulent activities. See also: Exemption Trust, Trust, Unit Trust Irrevocable trust A trust that is unable to be amended, altered, or revoked. paid an investment adviser $15,000 in fees in 1987. (Because of the trust's size, the trustees were not willing to serve without the advice of an investment adviser.) The trust deducted the fees in full on its 1987 form 1041. Under IRC (Internet Relay Chat) Computer conferencing on the Internet. There are hundreds of IRC channels on numerous subjects that are hosted on IRC servers around the world. After joining a channel, your messages are broadcast to everyone listening to that channel. section 67(a), certain miscellaneous itemized deductions Itemized Deduction A deduction from a taxpayer's taxable adjusted gross income that is made up of deductions for money spent on certain goods and services throughout the year. of individual taxpayers, including fees paid for investment advice, are allowed only to the extent they exceed, in the aggregate, 2% of the taxpayer's adjusted gross income (AGI (Artificial General Intelligence) A machine intelligence that resembles that of a human being. Considered impossible by many, most artificial intelligence (AI) research, projects and products deal with specific applications such as industrial robots, playing chess, ). Section 67(e) says an estate or trust's AGI is computed as that of an individual, "except ... costs ... paid or incurred in connection with the administration of the estate or trust and which would not have been incurred if the property were not held in such trust or estate ... shall be ... allowable ..." (emphasis added). The IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. claimed the 2%-of-AGI floor applied to the investment advice fees. The trust argued the floor did not apply. Had the funds not been held by a trust, it claimed, the fees would not have been incurred. Thus, the fees met the statutory exception to the 2% floor in section 67(e). The Tax Court ruled in the IRS's favor. (See JofA, May92, page 26.) Result: For the taxpayer. The investment adviser fees fell within the section 67(e) exception. The fees were incurred because the property was held in trust; the trustees were compelled to pay an investment expert in order to carry out their fiduciary duties Noun 1. fiduciary duty - the legal duty of a fiduciary to act in the best interests of the beneficiary legal duty - acts which the law requires be done or forborne . Thus, the investment advice fees were not subject to the 2% limit. * Wm. J. O'Neill, Jr., Irrevocable Trust (6th Cir., 1992), reversing 98 TC no. 17. |
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