The Chen Trust incurred the following items during the year. What is Chen's deduction for the tax preparation fees? $\begin{array}{lr}
\text { Taxable interest received } & \$ 40,000 \
\text { Tax-exempt interest received } & 60,000 \
\text { Tax preparation fees paid } & 5,000
\end{array}$

Question

Quizplus · Accepted Answer

Tax preparation fees are deductible to the extent that they relate to the production of taxable income. In this case, the taxable interest received is $40,000. The tax preparation fees are $5,000. The deduction for the tax preparation fees is $5,000 x $40,000/$100,000 = $2,000.

The Chen Trust Incurred the Following Items During the Year