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OPINION
The dispute between the parties centers around the
application of section 67. In support of the adjustments
reducing the amounts of the deductions attributable to the trust,
respondent relies upon section 67(a), which states:
SEC. 67(a). General Rule.--
In the case of an individual, the miscellaneous
itemized deductions for any taxable year shall be allowed
only to the extent that the aggregate of such deductions
exceeds 2 percent of adjusted gross income.
Petitioner argues that section 67(e) controls, which states, in
relevant part:
SEC. 67(e). Determination of Adjusted Gross Income in
Case of Estates and Trusts.--
For purposes of * * * [section 67] the adjusted
gross income of an estate or trust shall be computed in
the same manner as in the case of an individual, except
that
(1) the deductions for costs which are paid or
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,
and
(2) * * *
shall be treated as allowable in arriving at adjusted
gross income. * * *
According to petitioner, the expenses that gave rise to the
deductions attributable to the trust were paid or incurred in
connection with the administration of the trust. Relying upon
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