AICPA Suggests Clarification to Instruction For Form 4952 Regarding Estates and Trusts

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The American Institute of Certified Public Accountants, in a letter released Dec. 30, submitted comments to the Internal Revenue Service on suggested clarifications to the instructions to Form 4952, Investment Interest Expense Deduction, as it relates to estates and trusts.
The letter, dated Nov. 30, suggested a change with respect to the interest expense passed through to trusts from partnerships conducting a trade or business of trading in securities for their own account.
The instructions provide for a different treatment for the investment interest for a security trading business for trusts and estates than is provided for individual taxpayers, and the AICPA said that the treatment should be identical.
The AICPA said that it recognized that the disparate treatment of the investment interest expense between that of individuals and estates and trusts has been in the form's instructions for a number of years. However, many estates and trusts are now passive investors, the AICPA said, as investment vehicles have evolved.