What needs to be done to allocate the professional fees and other deductions to taxable interest and nonqualified dividends?
The correct answer is that the trustee must designate, preferably in writing, that professional fees, and other deductions should first be allocated to interest income that is fully taxable and to nonqualified dividends. Give bonus points if the tax professional mentions treasury regulation 1.652(b)-3(b). If you would like us to prepare your trust or estate tax return, please call us at 1-720-493-4804. Back to our Frequently Asked Questions page for trusts.
