Knight Analyzed

Helen Gunnarsson (Highland Park, Illinois) has recently published her article entitled Supremes limit trusts' ability to subtract investment-advice costs, 96 Ill. B.J. 123 (2008), in which she explains how SCOTUS held that "trusts are subject to a two-percent floor for subtracting advisory fees from their taxable income" in Knight v. Commissioner, 128 S. Ct. 782 (2008).

Ms. Gunnarsson concludes that:

After Knight, lawyers will have to consider carefully whether and to what extent they may have advised their trust and estate clients on a matter related to an investment - which could be as mundane as advising the trustee or executor on hiring someone to cut the grass on a piece of real estate owned by a trust or estate - to determine to what extent their fees are fully deductible to their clients * * *.