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September 21, 2020

IRS issues final regulations clarifying estate and non-grantor trust deductions that aren't considered miscellaneous deductions

The IRS has issued final regulations (TD 9918) clarifying that certain deductions allowed to an estate or non-grantor trust are not miscellaneous itemized deductions. (Under the Tax Cuts and Jobs Act, miscellaneous deductions may not be claimed for any tax year beginning after December 31, 2017, and before January 1, 2026.)

The final regulations also provide guidance on determining the character, amount and allocation of deductions that exceed gross income and are succeeded to by a beneficiary upon termination of the estate or non-grantor trust. A Tax Alert is forthcoming.