Trustees Relieved of "Unbundling" for 2009 Returns

On April 1, 2010, the Internal Revenue Service released Notice 2010-32, extending its no-unbundling-of-unitary-fees pronouncements to 2009 fiduciary income tax returns.

Previously, the Internal Revenue Service released Notices 2008-32 and 2008-116, reacting to the Supreme Court's unanimous holding in Michael J. Knight, Trustee v. Commissioner, 552 U.S. 181 (2008), that trust investment advisory fees are subject to the "2% floor" of section 67(a) of the Internal Revenue Code. Those Notices confirmed that fiduciaries preparing 2007 and 2008 income tax returns would not be required to "unbundle" a unitary fiduciary fee to separately state the components of the fee that are subject to the 2% floor. See "Extension of Interim Guidance on Deductibility of Investment Advisory Fees by Trusts" and our Trusts and the 2% Floor analysis on section 67(e) and the Knight decision in light of Notice 2008-32.