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Can ALL attorney fees be deductible on a 1041

Oh, You are so right.  I just called the state and they said to use the full amount.  I am DONE with all of work on the estate.  Thank you for your patience, time, understanding and hanging there with me.

Can ALL attorney fees be deductible on a 1041

I had to pay lawyers fees to probate my husband's half of our house which had been put in a trust.  Are these fees deductible on 2020 taxes if paid in 2020

SamS1
Expert Alumni

Can ALL attorney fees be deductible on a 1041

Probably not.  I am guessing when you talk about trust and 1/2 the house, you both had grantor trusts with 1/2 of your joint assets in each.   All income and expenses from a grantor trust are reported on your individual tax returns.  Normally that would flow to the miscellaneous itemized deduction line of the Sch A. However, miscellaneous itemized deductions are no longer a deduction on the schedule so you would not be able to deduction those expenses on your Federal tax return.  You would be able to add them to the cost basis of the house, which would lower any gain realized at sale.

 

Now if you live in state that still allows itemized deductions and did not couple with the 2018 tax law changes, you may be able to take the deduction if you itemize deductions for your state return and include the legal costs as an itemized deduction.

 

Additionally, if the trust is not a grantor trust, you could be reimbursed for those cost from the trust and the trust could deduct those costs as legal expense on the trust 1041 tax return.

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