Knight's Decided. Now What?Knight's Decided. Now What?
The U.S. Supreme Court's unanimous decision in Knight v. Commissioner1 on Jan. 16, 2008, appears to resolve a controversy that has been raging since the early 1990s concerning whether a trust's investment advisory fees (IAFs) are subject to the 2 percent of adjusted gross income floor (the 2 percent floor.) But Knight leaves open a good many questions, not the least of which is how the Internal Revenue
Kevin Matz
The U.S. Supreme Court's unanimous decision in Knight v. Commissioner1 on Jan. 16, 2008, appears to resolve a controversy that has been raging since the early 1990s concerning whether a trust's investment advisory fees (IAFs) are subject to the 2 percent of adjusted gross income floor (the 2 percent floor.) But Knight leaves open a good many questions, not the least of which is how the Internal Revenue Service will finalize its proposed regulations under Internal Revenue Code Section 67(e) concerning the applicability of the 2 percent floor to costs that are paid or incurred by trusts and estates.
The narrow question presented in Knight involved the standard for determining whether a trust's IAFs are subject to the 2 percent flo...
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