1041 expenses -- which year gets the deduction?

Forum|Forum|28 days ago
June 26, 2026
1 reply
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An estate is able to deduct against its income various expenses such as attorney fees, court filing fees, postage for essential estate documentation, etc.

Estates may not wrap up in a single tax year and the executor's reimbursements for the above expenses may happen in a tax year that is different than when the expense was paid for by the executor (or their agent, such as the probate attorney).

Does the executor need to ask their agent for any expenses they paid for in tax year X in order to file the 1041 for tax year X or does the executor wait until the money actually leaves the estate and that is the tax year on which the deduction is claimed, assuming the deduction is a valid expense? Is this a cash vs accrual accounting question?

M-MTax

Level 15

Is this a cash vs accrual accounting question?

Yes. If the estate is operating on a cash basis, then the expense is deducted in the tax year in which it is paid. If the estate is operating on a accrual basis, then the estate deducts the expense in the tax year in which it is incurred (regardless of when the expense is actually paid).

AllthethingsAuthor

Level 4

Thank you. It appears no money left the estate the first year (other than a partial distribution in the first 65 days of the new year, which I understand can treated as done in the previous year if an election is made) as the court order authorising the reimbursement of executor expenses happened in the second year of the estate.