¹ William L. Rudkin Testamentary Trust, 467 F3d 149 (2d Cir. 2006); only Judges Sotomayor and Hall rendered the decision in this case. Judge Feinberg originally sat on the case, but recused himself after oral argument. The panel opinion does not indicate whether Judge Feinberg participated in the panel’s initial conference deliberation on the case.

² See William J. O’Neill, 994 F2d 302 (6th Cir. 1993), aff’g 98 TC 227 (1992), nonacq., 1994-2 CB 1; Mellon Bank, N.A., 265 F3d 1275 (Fed. Cir. 2001), aff’g 47 Fed. Cl. 186 (2000); and J.H. Scott, 328 F3d 132 (4th Cir. 2003), aff’g 186 FSupp2d 664 (ED VA 2002).

³ O’Neill, note 2 supra; see, e.g., Balter, “Second Circuit Holds Trust’s Investment Advisory Fees Are Subject to 2% Floor,” 32 BNA Tax Management Insights and Commentary 79 (1/11/07); Keebler, “William L. Rudkin Testamentary Trust: Another Loss for Taxpayers on the Investment Advisory Fee Issue,” 84 Taxes 5 (December 2006); Langbein, “Second Circuit Rules Trust Investment Fees Subject to 2 Percent ‘Floor’of Section 67 in Highly Restrictive Decision,” 10 A.S. Pratt & Sons
Community Bank Tax Report 1 (November 2006); Levin, “Limitation on Itemized Deductions for Trusts: What Should a Trustee Do?” 111 Tax Notes 445 (4/24/06); Schaengold, “Tax Court Limits Trust Deductions,” 71 The CPA J 56 (April 2006); Janes, “Fiduciary Administrative Expenses: How Much is Deductible?” 32 Est. Plng. J 21 (November 2005); Schaengold, “Fourth Circuit Decides 2% Rule Limits Trust Deductions—But Will the Uniform Prudent Investor Act Change the Courts’ View?” 29 Tax  Mnmgt. Ests., Gifts and Trusts J 78 (January 2004); Kirk, “To Be or Not To Be: A Trust’s Investment Expense Deduction Subject to the Two-Percent Limitation,” 1 Pittsburgh Tax Review 223 (Spring 2004); Bell and King, “Sweeping Up the Two Percent Floor: Scott and the Deductibility of Investment Advisory Fees,” 38 Real Property, Probate & Trust J 589 (Fall 2003); Englebrecht and Anderson, “Which Side of the Line to Deduct Trust Investment Advice,” 70 Practical Tax Strategies 348 (June 2003); Schaengold, “Will New York’s Prudent Investor Act Result in Full Deduction of Investment Advice?” 73 The CPA J 66 (April 2003); Langstraat and Doss, Jr., “Courts Split Over How to Deduct Investment Advice Fees,” 68 Practical Tax Strategies 217 (April 2002); Cantrell, “Deducting Third-Party Investment Management Fees Under Sec. 67(e),” 35 The Tax Adviser (October 2002); Shepard and McMahon, “Who Says it’s a ‘Net’ Income Tax? What Happened to Those §212 Deductions?” 5 Fla. Tax Rev. 109 (2001); and Martin, “O’Neill v. Comm’r: Misplaced Trust,” 22 Northern Kentucky Law Review 841 (Summer 1995).

⁴ See Regs. Sec. 1.641(a)-1 and 1.641(b)-1.

⁵ See O’Neill, note 2 supra.

⁶ See Mellon Bank, N.A., note 2 supra.

⁷ See Scott, note 2 supra.

⁸ Webster’s New Collegiate Dictionary (1979), pp. 158, 1361.

⁹ See Williams v. Taylor, 529 US 362 (2000), at 404.

¹⁰ See Conf. Rep’t No. 99-841, 99th Cong., 2d Sess. (1986), 1986-3 CB Vol. 4, p. II-34; see also Appellant’s Brief at 38–50, Rudkin, note 1 supra (No. 05-5151-ag, 11/30/06).

¹¹ See H Rep’t No. 99-426, 99th Cong., 2d Sess. (1985), 1986-3 CB Vol. 2, p. 109.

¹² See HR 3838, as passed by the House Ways and Means Committee (12/17/85), Section 132; and HR 3838, as reported by the Senate Finance Committee (5/29/86), Sections 132–133.

¹³ See Joint Committee on Taxation, Conf. Agt., H.R. 3838, I.E.2.a. (JCX-22-86, 8/16/86).

¹⁴ See Conf. Rep’t No. 99-841, note 10 supra.

¹⁵ Sec. 67(c) prohibits an individual from claiming a full deduction for miscellaneous itemized deductions from passthrough entities that would not be deductible if incurred directly by the individual.

¹⁶ See IRS Statistics of Income, Table 1, Total Number of Returns to be Filed with the IRS: Calendar Years 2005–2012, available at www.irs.gov/taxstats/article/0,,id=136767,00.html.

¹⁷ See IRS Statistics of Income, Table 4, Fiduciary Income Tax Returns, Income, Deductions, and Tax Liability, by Type of Entity, Filing Year 2004, available at www.irs.gov/taxstats/indtaxstats/article/0,,id=96425,00.html#2.

¹⁸ See id.

¹⁹ See id.

²⁰ See IRS Statistics of Income, Table 3, Number of Returns by Type of Return and State, available at www.irs.gov/taxstats/indtaxstats/article/0,,id=96442,00.html#2.

²¹ See Jack E. Golsen, 54 TC 742 (1970).

²² See IRS Chief Counsel Advice (CCA) 200630016 (7/28/06).

²³ In re: Miller, 252 B.R. 110 (Bankr. ED TX 2000); see Application for Compensation and Reimbursement of Expenses (In re: Miller, No. 97-10434, 11/2/98).

²⁴ U.S. Department of Treasury and Internal Revenue Service, 2006–2007 Priority Guidance Plan (8/15/06), available at www.irs.gov/newsroom/topic/index.html.

²⁵ See Chevron U.S.A., Inc., 467 US 837 (1984).

²⁶ Uniform Prudent Investor Act §9(b), available at www.nccusl.com.

²⁷ Brief of Respondent-Appellee Commissioner at 56, Rudkin, note 1 supra (No. 05-5151-ag, 11/30/06).

²⁸ See Regs. Sec. 1.6662-4(d)(3). 

²⁹ Scott, note 2 supra.

³⁰ Rudkin, note 1 supra, pet. for reh’g filed, No. 05-5151-ag (11/30/06), reh’g den.

³¹ See Green, 533 F2d 1309 (2d Cir. 1976), rev’d, 430 US 462 (1977) (the Second Circuit denied rehearing en banc because it believed that Supreme Court resolution of the case was inevitable. As anticipated, the Supreme Court granted certiorari and reversed the Second Circuit’s decision).