How do I deduct the administration expenses of my father's estate?
Expenses of administering an estate can be deducted either from the gross estate in figuring the federal estate tax on Form 706 (PDF), United States Estate (and Generation-Skipping Transfer) Tax Return, or 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, these expenses cannot be claimed for both estate tax and income tax purposes. The expenses incurred In the sale of property are deductible by an estate only if necessary to pay decedent debts, or to preserve or distribute the property.
For more information, refer to Publication 559 (PDF), Survivors, Executors, and Administrators, designed to help those in charge of the property (estate) of an individual who has died. Also, refer to Publication 950 (PDF), Introduction to Estate and Gift Taxes.
Administration expenses include: fees paid to the fiduciary for administering the estate; attorney, accountant, and return preparer fees; expenses incurred for the production or collection of taxable income; expenses incurred for the management, conservation, or maintenance of property held for the production of taxable income; expenses in connection with the determination, collection, or refund of any tax.
References:
- Publication 559 (PDF), Survivors, Executors, and Administrators
- Publication 950 (PDF), Introduction to Estate and Gift Taxes
- Form 706 (PDF), United States Estate (and Generation-Skipping Transfer) Tax Return
- Form 1041 (PDF), U.S. Income Tax Return for Estates and Trusts
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