@maglib wrote:
3. As home sat with nobody in it and it was an investment upon Trust obtaining it, there were numerous costs of cleaning out, lawn maintenance. I read differing rulings on these costs as being costs to maintain assets. Thoughts on being other expenses?
For these expenses see https://www.irs.gov/instructions/i1041#en_US_2023_publink100077445
Other costs paid or incurred by estates and non-grantor trusts.
Under section 67(e), deductions are allowable for costs which are paid or incurred by an estate or non-grantor trust in connection with the administration of the estate or trust and would not have been incurred if the property were not held in such estate or trust.
In determining whether a cost is deductible by an estate or non-grantor trust, it must be determined whether the cost would be “commonly or customarily” incurred by a hypothetical individual owning the same property. If the cost would be deductible by a hypothetical individual, it is not deductible by the estate or non-grantor trust.
Ownership costs.
Ownership costs are costs that are chargeable to or incurred by an owner of property simply by reason of being the owner of the property. These costs are commonly or customarily incurred by a hypothetical individual owner of such property and are not deductible by an estate or non-grantor trust. Under section 67(b), they include, but are not limited to, condominium fees, insurance premiums, maintenance and lawn services, automobile registration and insurance costs, and partnership costs deemed to be passed through to and reportable by a partner. Other expenses incurred merely by reason of the ownership of property may be fully deductible under other provisions of the Code.
In short, if a hypothetical individual could not deduct these expenses, then neither can the trust.
