2018 Trust Expenses for Money Manager

[Kram BergGold]

We all know that investment expenses are no longer deductible on Form 1040, Schedule A. What about Form 1041 for a trust?

[taxea]

We all know that investment expenses are no longer deductible on Form 1040, Schedule A. What about Form 1041 for a trust?

Who is the "money manager"? Is it the trustee? If so, the trustee is entitled to charge a fee for managing the trust and this is deductible on the 1041. State Trust/Estate rules may address that amount that can be charged.
Look at the new tax laws. They appear to be directed to the 1040 and business taxes.

[Burke]

We all know that investment expenses are no longer deductible on Form 1040, Schedule A. What about Form 1041 for a trust?

There is much confusion over this, and it depends how you interpret Section 67(b), (e) and (f) of the IRC. Apparently everyone is awaiting clarification from the IRS on this point. So stay tuned. I assume you are referring to investment asset management fees which are currently subject to 2% exclusion as well as pro-rated between taxable and tax-exempt income on a trust. In the case where a "money manager" and the fiduciary/trustee are the same person, in my jurisdiction, the courts do not allow them to charge both unless extenuating circumstances can be shown. Since fiduciary fees appear to be exempt from the 2% treatment, I suppose a money manager, who is also a trustee, could elect to charge their fees as such depending on how the expected ruling comes down. In that case, he may have to change how those fees are calculated.