1114.Nonprofessional Fiduciaries

1114.1Are nonprofessional fiduciaries in a trade or business?

Nonprofessional fiduciaries serve as executors or administrators in isolated instances, and then only as personal representatives for the estate of deceased friends or relatives. Generally, they are not engaged in a trade or business, unless all of the following conditions are met:

1. There is a trade or business among the assets of the estate;

2. The fiduciary actively participates in the operation of this trade or business; and

3. The fees of the fiduciary are related to the operation of the trade or business.

1114.2Can nonprofessional fiduciary activities be considered a trade or business if they are extensive?

Activities of a nonprofessional fiduciary of a single estate may be a trade or business if they are of sufficient scope and duration. This may occur when the executor manages an unusually large estate that requires extensive management activities over a long period.