Built on the foundation of the Tax Management Portfolios™, Bloomberg Tax is a comprehensive tax research solution designed by tax practitioners for tax practitioners.
By Kathleen Ford Bay, Esq.
Richards Rodriguez & Skeith LLP, Austin, TX
Notice 2011-371 relates to the U.S. Supreme Court's decision in Knight v. Comr.,2 which held that costs paid to an investment advisor by a nongrantor trust or an estate generally are subject to the 2% floor for miscellaneous itemized deductions under §67(a), just as if an individual had incurred them. Consternation and dismay emanated from executors and trustees, especially from professional, corporate fiduciaries, for their fees are often "bundled," with a single fee representing services for management, investment, gathering of information, and making decisions based on discretion contained in the governing document. Some of these "bundled" fees are subject to the 2% floor and some are fully deductible. "Un-bundling" such fees could be rather difficult and certainly would prove time consuming and costly.
Temporary relief appeared in the form of Notice 2008-32,3 then Notice 2008-116,4 and then Notice 2010-32,5 providing in the last notice that, for tax years beginning before January 1, 2010, the fiduciaries would not be required to determine the portion of their "bundled" fees that was subject to the 2% floor. With Notice 2011-37, relief has, again, come. Now, taxpayers do not have to "un-bundle" fees for any taxable year that begins before final regulations are published in the Federal Register. Be alert, however, for further developments as Notice 2011-37 also states that "the IRS and Treasury Department expect to issue regulations under Regs. §1.67-4 consistent with the Supreme Court's holding in Knight." Given other priorities for the Treasury Department, including the issuance of Form 8939 for carryover basis reporting and a Form 706 adapted for the estates of 2010 decedents, Knight regulations may not be imminent.
This commentary also will appear in the July 2011, issue of the BNA Tax Management Estates, Gifts and Trusts Journal. For more information, in the BNA Tax Management Portfolios, see Acker, 852 T.M., Income Taxation of Trusts and Estates, and in Tax Practice Series, see ¶6110, Introduction — The Income Taxation System Applicable to Estates, Gifts and Trusts, and ¶6120, Estate and Trust Income Taxation — General Rules.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)