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gross income. For estates and trusts, section 67(e) mandates
application of the rule of section 67(a), with specified
modifications. Specifically, section 67 provides as follows in
relevant part:
SEC. 67. 2-PERCENT FLOOR ON MISCELLANEOUS ITEMIZED
DEDUCTIONS.
(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.
* * * * * * *
(e) Determination of Adjusted Gross Income in Case
of Estates and Trusts.--For purposes of this section,
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 * * *
* * * * * * *
shall be treated as allowable in arriving at adjusted
gross income. * * *
Hence, the statutory text of section 67(e)(1) creates an
exception allowing for deduction of trust expenditures without
regard to the 2-percent floor where two requirements are
satisfied: (1) The costs are paid or incurred in connection with
administration of the trust, and (2) the costs would not have
been incurred if the property were not held in trust. Otherwise,
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