U.S. Supreme Court in Rudkin Says Investment Advisory Fees Are Subject to the 2% Floor

Abstract

<p>In a rare unanimous opinion, the United States Supreme Court on January 16, 2008 settled, for now, the question of whether investment advisory fees are fully deductible.<strong>1 </strong>The high court held that investment advisory fees incurred by trusts are generally subject to the two-percent floor for miscellaneous itemized deductions.<strong>2 </strong>The decision means that such fees are deductible only to the extent that their total, along with certain other miscellaneous itemized deductions, exceeds two-percent of the trust’s adjusted gross income, which translates into smaller deductions and more taxable income for many trusts.</p>