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MISC Estate & Abusive Tax Avoidance Transactions

Question: How do I deduct the administration expenses of my father's estate?

Answer:

The expenses incurred by an estate for its administration can either be deducted as an expense against the estate and generation-skipping transfer (GST) tax or the annual income tax against the estate.

  • You may deduct the expense from the gross estate in figuring the federal estate tax on Form 706 (PDF), United States Estate (and Generation-Skipping Transfer) Tax Return, OR
  • You may deduct the expense from the estate's gross income in figuring the estate's income tax on Form 1041 (PDF), U.S. Income Tax Return for Estates and Trusts.
  • However, you cannot claim these expenses for both estate tax and income tax purposes.
  • In most cases this rule also applies to expenses incurred in the sale of property by the estate.  For more information, refer to Publication 559, Survivors, Executors, and Administrators, designed to help those in charge of the property (estate) of an individual who has died.

In general, administration expenses deductible in figuring the estate tax include:

  • Fees paid to the fiduciary for administering the estate;
  • Attorney, accountant, and return preparer fees;
  • Expenses incurred for the management, conservation, or maintenance of property;
  • Expenses in connection with the determination, collection, or refund of the estate's tax liability.

Category: Other (Alternative Minimum Tax, Estates, Trusts, Tax Shelters, State Tax Inquiries)
Subcategory: MISC Estate & Abusive Tax Avoidance Transactions

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The OMB number for this study is 1545-1432.
If you have any comments regarding this study, please write to:
IRS, Tax Products Coordinating Committee
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue NW
Washington, DC 20224