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deductibility is limited to the extent it would be for individual
taxpayers.
In that vein, regulations promulgated under section 67 list
examples of expenses that, in the context of individuals, are
subject to the 2-percent floor. Sec. 1.67-1T(a)(1), Temporary
Income Tax Regs., 53 Fed. Reg. 9875 (Mar. 28, 1988).3 Included
are expenses incurred “for the production or collection of income
for which a deduction is otherwise allowable under section 212(1)
and (2), such as investment advisory fees, subscriptions to
investment advisory publications, certain attorneys’ fees, and
the cost of safe deposit boxes”. Sec. 1.67-1T(a)(1)(ii),
Temporary Income Tax Regs., supra (emphasis added).
II. Contentions of the Parties
Against this backdrop, the trustee contends that the
investment management fees in dispute here are properly
deductible under the exception set forth in section 67(e)(1).
The trustee maintains that the fees were paid in connection with
administration of the trust and would not have been incurred if
the property were not held in trust. In reaching this
conclusion, the trustee relies largely on the fiduciary duties
imposed on trustees. According to the trustee, while an
3 Temporary regulations are entitled to the same weight and
binding effect as final regulations. Peterson Marital Trust v.
Commissioner, 102 T.C. 790, 797 (1994), affd. 78 F.3d 795 (2d
Cir. 1996).
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