Mar 1, 2008 12:00 PM

By Kevin Matz

The U.S. Supreme Court's unanimous decision in Knight v. Commissioner¹ on Jan. 16, 2008, appears to resolve a controversy that has been raging since the early 1990s concerning whether a trust's investment advisory fees (IAFs) are subject to the 2 percent of adjusted gross income floor (the 2 percent floor.) But Knight leaves open a good many questions, not the least of which is how the Internal Revenue Service will finalize its proposed regulations under Internal Revenue Code Section 67(e) concerning the applicability of the 2 percent floor to costs that are paid or incurred by trusts and estates.

The narrow question presented in Knight involved the standard for determining whether a trust's IAFs are subject to the 2 percent floor under IRC Section 67(e). That section provides that the 2 percent floor won't apply to “costs which are 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.”²

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

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Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

E-Newsletter Signup

2011 Trust Glossary

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50 Years Ago This Month

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50 years ago, in May 1962, we featured articles such as: "Future of Canadian Trusteeship" by Arthur H. Mingay", "Training Trust Employees" by Ian M. Marr, "What is a Trust Officer?" by Eric J. Brown, and "Selling Services" by Donald I. Webb.

Conrad Teitell's Guide to Tax Benefits For Charitable Gifts

Click here to view the most up to date guide (September 2011)

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