Susan L. Bay - Page 7

                                        - 7 -                                         

          2(c), Income Tax Regs.  Because the deductions here under                   
          consideration constitute "Miscellaneous Itemized Deductions"                
          within the meaning of section 67(b), the provisions of section              
          67(a) are applicable.                                                       
               The applicability of section 67(a) is further supported by             
          section 67(c), which prohibits the indirect deduction through a             
          pass-through entity of amounts which would not be allowable as a            
          deduction if paid or incurred directly by an individual.  The               
          trust is a "pass-through entity".  See sec. 1.67-2T(g)(1)(i),               
          Temporary Income Tax Regs., 53 Fed. Reg. 9878 (Mar. 28, 1988).              
          As stated in sec. 1.67-2T(b)(1), Temporary Income Tax Regs., 53             
          Fed. Reg. 9877 (Mar. 28, 1988), "the [sec. 67(a)] limitation                
          applies to the grantor * * * of a grantor trust with respect to             
          items that are paid or incurred by a grantor trust and are                  
          treated as miscellaneous itemized deductions of the grantor".  If           
          the expenses were directly paid or incurred by petitioner, the              
          amounts of the deductions would have to be reduced in accordance            
          with section 67(a).  Petitioner cannot deduct a greater amount              
          merely because the deductions were passed through to her from the           
          trust.                                                                      
               Accordingly, we hold that section 67(a) is applicable to the           
          deductions attributable to the trust, and respondent's                      
          adjustments in this regard are sustained.                                   
               In order to reflect the foregoing,                                     





Page:  Previous  1  2  3  4  5  6  7  8  Next

Last modified: May 25, 2011