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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
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: 11 months ago.
Category: Tax
Expert:  Lev replied 11 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 11 months ago.

See page 31

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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