Final Treasury Regulations on Code Section 67(e)
Overview
The Internal Revenue Service has issued long-anticipated final Treasury Regulations delineating which expenses of an estate or a non-grantor trust are not subject to the 2% floor on miscellaneous itemized deductions. The final Regulations contain no surprises and no major victories for taxpayers, as they differ little from the revised Proposed Regulations issued in September of 2011.
However, representing a minor win for taxpayers, the final Regulations introduce a modicum of certainty by providing concrete examples of expenses that will either always be or never be subject to the 2% floor. The final Regulations are effective for tax years beginning on or after May 9, 2014.