Application of the 2-percent floor to trust and estate expenses

Though the IRS issued the final regulations for section 67 in May 2014 to require the unbundling of a fiduciary's integrated fee, corporate fiduciaries and tax planners continue to struggle with designing and implementing procedures to ensure that the directive is properly accounted for on returns during the upcoming tax filing season.

While most corporate fiduciaries have moved on to the task of applying the regulations to their trusts and estates, some commentators still contend that the regulations misinterpret the U.S. Supreme Court decision in Knight v. CIR, 552 US 181, 128 S. Ct. 782 (2008), and should be challenged.

For high-net-worth individuals, estates and trusts, the stakes are high. Many of these trusts and estates are subject to the alternative minimum tax (AMT).

This article discusses the potential for increasing tax lability since the new rules for calculating income tax now eliminates many deductions and credits.