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Estates and Trusts: Guidance for Itemizing Deductions

Posted on June 1st, 2020

The Tax Cuts and Jobs Act (TCJA) prohibits individual taxpayers from claiming miscellaneous itemized deductions for any taxable year beginning after December 31, 2017, and before January 1, 2026. However, proposed guidance has recently been issued clarifying that certain deductions of estates and non-grantor trusts are not miscellaneous itemized deductions and are allowable in figuring adjusted gross income, specifically:

  • Costs paid or incurred in connection with the administration of the estate or trust which would not have been incurred otherwise.
  • Deductions concerning the personal exemption of an estate or non-grantor trust.
  • Deductions for trusts distributing current income.
  • Deductions for trusts accumulating income

The proposed guidance also clarifies how to determine the character, amount, and manner for allocating excess deductions that beneficiaries succeeding to the property of a terminated estate or non-grantor trust may claim on their individual income tax returns.

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