New Tax Case Provides Guidance on Deductions for Fees Incurred by Family Offices (Lender Management LLC vs IRS)

On December 13, 2017, the US Tax Court ruled that a family office was appropriately treated as a business, and permitted to deduct its expenses pursuant to IRS Code Section 162.

The taxpayer was the family office of Lender’s Bagels. The family was owned by two family trusts. Whether or not a family office is a business is essential because deductions under Code Section 212 are substantially limited. In this case, because the family office was involved in an activity with continuity and regularity, the primary purpose of which was to generate income or profit, it qualified as a trade or business, subject to Code Section 162 vs Code Section 212 which would have severely limited their deductions.


The Lender Management case provides the basis for a Family Office to be treated as a trade for federal income tax purposes. With careful tax planning, a family office should be treated as a business and entitled to deduct their expenses according to IRC Code Section 162.

For additional information on how you may qualify your family office as a trade or business, please contact: Michael Rosenblatt, President The Quest Organization and of FON Search at 212-971-0033 or

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