Ref: Regulation 1.67-4; TD 9664, 5/8/2014

Some trust/estate expenses are not fully deductible. On May 8, the IRS issued final regulations listing those administrative-type expenses which will be allowed as fully deductible on a trust or estate return.  Among those are:

1. Ownership costs: Such as property tax on non-rental real estate.

2. Tax preparation fees tied to the trust/estate: Examples given are fees to prepare estate returns, trust returns and the decedent’s final individual income tax returns (year of death).

3. Appraisal fees: Incurred to value trust/estate assets as of the decedent’s date of death (or the alternate valuation date) or subsequent valuations for any other valid trust/estate purpose.

4. Fiduciary expenses: For example, probate court fees/costs, fiduciary bond premiums and cost of certified copies of the decedent’s death certificate.

5. Investment advisory fees: If greater than those charged to an individual investor. Examples would include professional advisory fees tied to advice regarding the beneficiaries of retirement accounts or fees charged to create a listing of security values as of the date of death (or alternative valuation date).

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