Final regulations released to Federal Register: Deductions allowed estates, non-grantor trusts

Deductions allowed estates, non-grantor trusts

The U.S. Treasury Department and IRS today officially released for publication in the Federal Register final regulations (T.D. 9918) concerning certain deductions that are allowed to an estate or non-grantor trust and are not treated as miscellaneous itemized deductions.

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Read the final regulations [PDF 268 KB] that were published in the Federal Register on October 19, 2020.

The IRS on September 21, 2020, posted to its website a version of these final regulations to clarify that the following deductions allowed to an estate or non-grantor trust are not miscellaneous itemized deductions:

  • Costs paid or incurred in connection with the administration of an estate or non-grantor trust that would not have been incurred if the property were not held in the estate or trust
  • The personal exemption of an estate or non-grantor trust
  • The distribution deduction for trusts distributing current income
  • The distribution deduction for estates and trusts accumulating income

These deductions, thus, are not affected by the suspension of the deductibility of miscellaneous itemized deductions for tax years beginning after December 31, 2017, and before January 1, 2026, pursuant to provisions of the 2017 U.S. tax law (Pub. L. No. 115-97) or the law that is often referred to as the "Tax Cuts and Jobs Act."

The version posted by the IRS in September 2020 includes the following statement:

This document has been submitted to the Office of the Federal Register (OFR) for publication and will be pending placement on public display at the OFR and publication in the Federal Register. The version of the final regulations released today may vary slightly from the published document if minor editorial changes are made during the OFR review process. The document published in the Federal Register will be the official document.

Read a computer-generated document [PDF 605 KB] that provides a comparison of the version of the final regulations submitted today for publication in the Federal Register against the version posted by the IRS on September 21, 2020. This unofficial document was produced by KPMG for the purpose of showing what changes, if any, were made to the regulations prior to being released to the Federal Register for publication. It has not been reviewed for accuracy.

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

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