Level 3

Recent IRS Regulation concerning Excess Deductions on Termination of Estates

The attorney who prepared the Form 1041 and Schedule K-1 for my mother’s estate called the following information from the IRS to my attention.



IRS provides final regulations on deductions for estates and non- grantor trusts, including excess deductions on termination 

IR-2020-217, September 21, 2020 

WASHINGTON — The Internal Revenue Service today issued final regulations ! that provide guidance for decedents' estates and non-grantor trusts clarifying that certain deductions of such estates and non-grantor trusts are not miscellaneous itemized deductions. 

The Tax Cuts and Jobs Acts (TCJA) prohibits individuals, estates, and non-grantor trusts from claiming miscellaneous itemized deductions for any taxable year beginning after December 31, 2017, and before January 1, 2026. 

Specifically, the final regulations clarify that the following deductions are allowable in figuring adjusted gross income and are not miscellaneous itemized deductions: 

Deductions for costs paid or incurred in connection with the administration of the estate or trust which would not have been incurred if the property were not held in such estate or non-grantor trust.
The deduction concerning the personal exemption of an estate or non-grantor trust.
The distribution deductions for trusts distributing current income. 

The distribution deductions for trusts accumulating income. 

In addition, the final regulations provide guidance on determining the character and amount of, as well as the manner for allocating, excess deductions that beneficiaries succeeding to the property of a terminated estate or non-grantor trust may claim on their individual income tax returns. 

For more information about this and other TCJA provisions, visit Page Last Reviewed or Updated: 19-Oct-2020 



I am using Turbo Tax Deluxe for 2020 income tax returns.

I have entered the Excess Deductions for my mother’s estate in the Box 11A (Excess Deductions) field of my Schedule K-1 information.

I have also entered an amount in the Box 11C (Long-term Capital Loss Carryover) field of my Schedule K-1 information.

Schedule D, Line 12 of my 2020 income tax return shows the Capital Loss reported in Box 11C of my Schedule K-1 information.

But the Adjusted Gross Income shown on my Form 1040 for 2020 has not been reduced for the Excess Deductions reported in Box 11A of my Schedule K-1 information.

Shouldn’t the Adjusted Gross Income on my Form 1040 be reduced for the Excess Deductions from my mother’s estate as provided by the final IRS regulations dealing with this matter?