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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.
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, orAn election precinct official.
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