Eligibility
Estates and non-grantor trusts incurring specific administrative costs (e.g., fiduciary fees, certain legal/accounting fees).
Frequently Asked Questions
Who is eligible for the Above-the-Line Trust Administration Deduction?
Estates and non-grantor trusts incurring specific administrative costs (e.g., fiduciary fees, certain legal/accounting fees).
How does the Above-the-Line Trust Administration Deduction work?
Costs of trust administration that would not have been incurred if the property were not held in trust are deductible in arriving at Adjusted Gross Income, bypassing the suspension of miscellaneous itemized deductions.
What law authorizes the Above-the-Line Trust Administration Deduction?
The Above-the-Line Trust Administration Deduction is authorized under IRC §67(e) of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §67
Source: Internal Revenue Code, Title 26, United States Code
§ 67. 2-percent floor on miscellaneous itemized deductions(a) General ruleIn the case of an individual, the miscellaneous itemized deductions for any taxable year shall be allowed only to the extent that the aggregate of such deductions exceeds 2 percent of adjusted gross income.
(b) Miscellaneous itemized deductionsFor purposes of this section, the term “miscellaneous itemized deductions” means the itemized deductions other than—(1) the deduction under section 163 (relating to interest),
(2) the deduction under section 164 (relating to taxes),
(3) the deduction under section 165(a) for casualty or theft losses described in paragraph (2) or (3) of section 165(c) or for losses described in section 165(d),
(4) the deductions under section 170 (relating to charitable, etc., contributions and gifts) and section 642(c) (relating to deduction for amounts paid or permanently set aside for a charitable purpose),
(5) the deduction under section 213 (relating to medical, dental, etc., expenses),
(6) any deduction allowable for impairment-related work expenses,
(7) the deduction under section 691(c) (relating to deduction for estate tax in case of income in respect of the decedent),
(8) any deduction allowable in connection with personal property used in a short sale,
(9) the deduction under section 1341 (relating to computation of tax where taxpayer restores substantial amount held under claim of right),
(10) the deduction under section 72(b)(3) (relating to deduction where annuity payments cease before investment recovered),
(11) the deduction under section 171 (relating to deduction for amortizable bond premium),
(12) the deduction under section 216 (relating to deductions in connection with cooperative housing corporations), and
(13) the deductions allowed by section 162 for educator expenses (as defined in subsection (g)).
(c) Disallowance of indirect deduction through pass-thru entity(1) In generalThe Secretary shall prescribe regulations which prohibit the indirect deduction through pass-thru entities of amounts which are not allowable as a deduction if paid or incurred directly by an individual and which contain such reporting requirements as may be necessary to carry out the purposes of this subsection.
(2) Treatment of publicly offered regulated investment companies(A) In generalParagraph (1) shall not apply with respect to any publicly offered regulated investment company.
(B) Publicly offered regulated investment companiesFor purposes of this subsection—(i) In generalThe term “publicly offered regulated investment company” means a regulated investment company the shares of which are—(I) continuously offered pursuant to a public offering (within the meaning of section 4 of the Securities Act of 1933, as amended (15 U.S.C. 77a to 77aa)),
(II) regularly traded on an established securities market, or
(III) held by or for no fewer than 500 persons at all times during the taxable year.
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