This educational guide is based on the linked primary sources. It is not a Court publication, is not affiliated with the Court, and is not legal advice.
In brief
Overview
According to Peter J. Rubin (Petitioner), according to Peter J. Rubin (Petitioner), petitioner argues that the case concerns the meaning of 26 U.S.C. § 67(e), which addresses costs incurred in connection with the administration of an estate or trust and that would not have been incurred if the property were not held in such trust or estate.
Background and question before the Court
According to Peter J. Rubin (Petitioner), according to Peter J. Rubin (Petitioner), according to Peter J. Rubin (Petitioner), the dispute centers on the meaning of the phrase “costs which are paid or incurred in connection with the administration of the estate or trust and which would not have been incurred if the property were not held in such trust or estate” in § 67(e).
What each side argues
Petitioner (Knight)
Mr. Miller argues that § 67(e) creates a narrow exception for costs that would not have been incurred if the property were not held in trust.
According to Mr. Rubin, petitioner contends that if the expense is unrelated to fiduciary responsibilities, paying for advice would breach fiduciary duty and should not be deductible.
According to Mr. Rubin, petitioner maintains that the subjective knowledge of the advisor is irrelevant to the deduction analysis.
Respondent (Commissioner)
Source-limited. The record does not yet support a complete account.
What happened at oral argument
Justice Kennedy asked whether the deduction could be claimed under § 162 without invoking capitalization rules in § 212.
According to Justice Scalia, justice Scalia inquired about trustee obligations related to preserving property versus financial assets.
According to Justice Breyer, justice Breyer noted the lack of authority on pass‑through treatment for trusts and estates.
Justice Alito asked whether a regulation had been issued listing the applicable costs.
According to Chief Justice Roberts, chief Justice Roberts queried how the petitioner’s customary test works with trusts of different sizes.
Justice Stevens asked whether the petitioner’s position means such costs will never be deductible.
- [1] 90d506512ffeebf6c486-r1-b0f6a1f35944289f.pdf, p. 4
- [2] 90d506512ffeebf6c486-r1-b0f6a1f35944289f.pdf, p. 8
- [3] 90d506512ffeebf6c486-r1-b0f6a1f35944289f.pdf, p. 23
- [4] 90d506512ffeebf6c486-r1-b0f6a1f35944289f.pdf, p. 24
- [5] 90d506512ffeebf6c486-r1-b0f6a1f35944289f.pdf, p. 39
- [6] 90d506512ffeebf6c486-r1-b0f6a1f35944289f.pdf, p. 47
What the Court decided
Why it matters
Terms to know
No glossary terms are available for this guide.
Primary sources
Read the source materials on the official site or open the immutable repository copy used for this guide.
- 90d506512ffeebf6c486-r1-b0f6a1f35944289f.pdforal argument transcript
Guide generated September 22, 2026. Automated validation accepted this version.