In response to public comments, the IRS amended the final regulations for Regs. §1.67-4 to delay the effective date until on or after January 1, 2015.  The regulations address which nongrantor trust or estate costs and expenses are subject to the 2% deduction floor for income tax purposes, and which costs and expenses are completely deductible from trust or estate income. The regulations were originally effective for tax years beginning on or after May 9, 2014. That meant that existing nongrantor trusts and estates using the calendar year as their tax year would not implement the final regulations until January 1, 2015.  However, the final regulations applied immediately to any nongrantor trusts created after May 9, 2014, any estates of decedents dying after May 8, 2014, and any estates with a fiscal year beginning after May 8, 2014. The IRS received comments stating that the effective dates did not give the fiduciaries enough time to make the changes needed to comply with the final regulations, particularly if the fiduciary had to create and implement programs to determine the portion of a bundled fee attributable to costs subject to the 2% floor versus costs that are completely deductible. 

Notice 2011-37 next hit provided that for any tax year beginning before the IRS published final regulations in the Federal Register, estates and nongrantor trusts could deduct all investment advisory fees and other costs that are bundled as part of one commission or fee paid to a trustee or executor without regard to the 2% floor. The final regulations were published in the Federal Register on May 9, 2014.  While there is no mention Notice 2011-37 in the amendment or its preamble, presumably in extending the applicability date of the final regulations until December 31, 2014, the IRS also extended the relief granted by Notice 2011-37 until December 31, 2014 as well.

For a more in-depth discussion of the impact of the final regulations on nongrantor trusts and estates, and the issues surrounding unbundling fees, see the blog post "Finding Our Way Through the Knight – IRS Issues Final Regulations to Guide Us Through Miscellaneous Deductions for Estates and Nongrantor Trusts."