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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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Is trustee fee paid to a trustee taxable to m if the trust

Customer Question

Is trustee fee paid to a trustee taxable to him if the trust does not take its usual deduction for the fee paid? The trust document provides that the trustee pay himself a reasonable fee from the trust assets for time spent in administration of the trust or estate under unusual circumstances or hardship. This is a decedent's family trust. The trustee is also one of 14 beneficiaries of the $750,000 trust. Is this a usual or unusual or prohibited practice.
Submitted: 9 months ago.
Category: Tax
Expert:  Lev replied 9 months ago.

The trustee fee paid to a trustee are taxable for the trustee and reported on the individual tax return (assuming the trustee is an individual).

That amount generally is not subject to self-employment tax unless the trustee is providing services as a self-employed person.

That is regardless whether the trust deducts these fess or not.

As long as fees are paid for services - they are included into taxable income.

Expert:  Lev replied 9 months ago.

See page 31

https://www.irs.gov/pub/irs-pdf/p525.pdf

Fees for services. Include all fees for your services in your income. Examples of these fees are amounts you receive for services you perform as:
A corporate director,
An executor, administrator, or personal representative of an estate,
A manager of a trade or business you operated before declaring Chapter 11 bankruptcy,
A notary public, or
An election precinct official.

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