“Family Office Expenses Deductible or Not?”

On October 3, Family Office Magazine published their Autumn 2025 Issue that included an article from Shareholders Tom Cullinan, John Hackney and Former IRS Commissioner and Shareholder Chuck Rettig that discussed the ability to deduct the costs associated with operating a family office.

Cullinan, Hackney and Rettig outline the Lender Management v Commissioner, T.C. Memo. 2017-246 case, in which Chamberlain Hrdlicka represented the taxpayers. They use this example to outline how to structure a successful family office.

“The Court in Lender noted that a common factor that distinguishes a “trade or business” from managing one’s own investment is the receipt of something “other than a normal investor’s return.” If the taxpayer owns a share of stock and receives a dividend just like every other stockholder, he has received a normal investor’s return,” the attorneys explained. “In contrast, if the taxpayer receives separate compensation (like a profits interest) for the services provided, this is compensation “other than a normal investor’s return”.”

To review the full article, subscribers may click here.