Fee dispute to be heard by Supremes

The U.S. Supreme Court has agreed to hear a dispute on whether a tax code allows trusts to claim a full deduction for investment management fees. Knight v. Commissioner of Internal Revenue, was granted certiorari on Monday. The case, first filed in 2005 as Rudkin v. Commissioner, goes back to a disagreement among circuit courts as to whether a trust’s investment management fees are fully deductible or if they are subject to a 2% reduction. IRC 67(e), a tax code, allows investment management fees to be deducted as administrative costs of the trust, but federal appeals courts are split on the way these fees are deducted. Knight v. Commissioner was one of four cases granted certiorari. Briefs are due in August, September and October, and the oral arguments are scheduled for December.