Great news, IRS today issued Notice 2018-16 confirming a Trust or Estate 1041 may still deduct Miscellaneous itemized deductions described in 67(e)(1); (deductions for administrative costs paid or incurred by an estate or trust that would not have been incurred if the property were not held in such estate or trust are treated as allowable in arriving at AGI.)
The Treasury Department and the IRS intend to issue regulations clarifying that estates and non-grantor trusts may continue to deduct expenses described in section 67(e)(1) and amounts allowable as deductions under section 642(b), 651 or 661, including the appropriate portion of a bundled fee, in determining the estate or non- grantor trust’s adjusted gross income during taxable years, for which the application of section 67(a) is suspended pursuant to section 67(g). Additionally, the regulations will clarify that deductions enumerated in section 67(b) and (e) continue to remain outside the definition of “miscellaneous itemized deductions” and thus are unaffected by section 67(g).