- Yes, "Cash basis taxpayers deduct expenses in the year they are paid and recognize income in the year it is received." is taught in Accounting 1A. But then too many people have brought up amending prior years tax returns. Why? These people seem to be seeing the trees and not the forest.
Of course, we's not certain that the OP's 1041 has elected to be taxed on a cash basis, she hasn't said anything about that. In my over 45 years of public accounting practice, however, I have never seen an estate using the accrual method of accounting for tax reporting purpose.
Assuming the OP's 1041 uses cash method, she can deduct, at a minimum, all the legal and accounting fees paid/reimbursed in 2023. Fairly sure that those fees would wipe out the $2,900 portfolio income.
