Lacerte has screen 32 Other Deductions where we entered investment advisory fees, and selected 2% of AGI limitation applied. As of 2018 and TCJA these fees are no longer deductible. In the past I have seen Tax Prep fees entered here as well subject to 2% but there is also screen 31 Taxes and Fees that will populate 1041 line 14, fully deductible. Also, screen 31 has two fields, Tax Preparation fees allocable to taxable income and another for allocable to taxable and tax-exempt income (even if I enter under tax prep in the second field, it does not allocate, it shows the entire amount on line 14).
Also, what about ADR fees, were they ever deductible albeit subject to 2% on a trust return? After TCJA they would not be, but should they still be entered like advisory fees for states like CA?
Solved! Go to Solution.
I'm not well versed in Trusts, but here are a few things to get you going. If you have any followup questions, somebody else may be able to help you further.
This means that the Supreme Court decision in Knight, 552 U.S. 181 (2008), is now even more important than before. This decision confirmed the deductibility of all investment advisory fees paid by a trust or estate (that would have not have been incurred if the taxpayer were not a trust or estate) without the 2%-of-AGI limitation. In Notice 2018-61, the IRS clarified this point as well.https://supreme.justia.com/cases/federal/us/552/181/