Final regulations - Amended effective date for regulations on investment advisory fees paid by trusts and estates subject to 2% floor on miscellaneous itemized deductions 

July 16:  The Treasury Department and IRS today released for publication in the Federal Register a document that amends and revises the effective date of final regulations (T.D. 9664) that were issued in May 2014, concerning costs incurred by estates or non-grantor trusts subject to the 2% floor for miscellaneous itemized deductions under section 67(a).

The May 2014 final regulations, as originally promulgated, were applicable to tax years beginning on or after May 9, 2014, which was the date when they were published in the Federal Register.


Today’s amendment [PDF 195 KB] explains that as issued, the May 2014 final regulations would not be applicable to fiduciaries of existing non-grantor trusts and calendar-year estates until January 1, 2015, but would apply earlier to any non-grantor trust created, any estate of a decedent who dies, and any existing fiscal-year estate with a tax year beginning after May 8, 2014 (but during 2014).


In response to comments, the IRS and Treasury have amended the effective date provision of the final regulations so that the regulations apply to tax years beginning on or after January 1, 2015. As explained in the preamble, this is to allow fiduciaries sufficient time to design and implement program changes to determine the portion of a bundled fee that is attributable to costs that are subject to the 2% floor versus costs that are not subject to the 2% floor.


Read an initial description of the May 2014 final regulations in TaxNewsFlash-United States.




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