Opinion ID: 2967768
Heading Depth: 4
Heading Rank: 1

Heading: the deductions for costs which are paid or

Text: incurred in connection with the administration of the estate or trust and which would not have been incurred if the property were not held in such trust or estate . . . shall be treated as allowable in arriving at adjusted gross income. I.R.C. § 67(e). Thus, § 67(e) establishes the general rule that the adjusted gross income of an estate or trust must be computed in the same manner as in the case of an individual. Id. An exception to that rule is provided in § 67(e)(1), which allows deductions (above the line and without regard to the 2% floor) for costs that (1) are paid or incurred in connection with the administration of the . . . trust; and (2) would not have been incurred if the property were not held in such trust. Id. § 67(e)(1). It is undisputed that the investment-advice fees in this case were paid or incurred in connection with the administration of the . . . trust. Id. Thus, the issue presented here, and on which our two sister circuits have disagreed, is whether a trust’s investment-advice fees fit within the second requirement of § 67(e)(1), such that they should be fully deductible without regard to the 2% floor established by § 67(a). 10 SCOTT v. UNITED STATES Accordingly, we are called upon to interpret the meaning of, and relationship between, provisions of § 67(a) and § 67(e).