topic Re: Parent in Deductions & credits

Parent

Rad_trader — Tue, 06 Jul 2021 00:18:03 GMT

My father had a car wreck and passed away. Unfortunately he didn't have auto insurance so the other person's insurance is wanting a settlement which im going to personally pay afterwards ill be receiving his "estate" my question is by paying off the settlement to aquire the property can I claim it on my taxes

Re: Parent

Mike9241 — Tue, 06 Jul 2021 00:28:50 GMT

no, you can't claim it. it's his estate that is liable. if his estate was large enough to require the filing of an estate tax return - form 706 (United States Estate Tax Return) this could be claimed as a deduction on it. personal casualty losses are no longer deductible on income tax returns so the settlement can not be claimed on form 1041 (U.S. Income Tax Return for Estates and Trusts)

Re: Parent

Opus 17 — Tue, 06 Jul 2021 11:00:02 GMT

You must not “personally“ pay anything. Your father‘s estate will pay a settlement, if a settlement is required, and you will receive any residual amount in the estate. You must have competent legal help and tax help in this situation, to avoid serious problems for yourself down the road. Please contact appropriate professionals immediately.

Re: Parent

Opus 17 — Tue, 06 Jul 2021 13:21:27 GMT

@Mike9241 wrote:

no, you can't claim it. it's his estate that is liable. if his estate was large enough to require the filing of an estate tax return - form 706 (United States Estate Tax Return) this could be claimed as a deduction on it. personal casualty losses are no longer deductible on income tax returns so the settlement can not be claimed on form 1041 (U.S. Income Tax Return for Estates and Trusts)

Personal legal settlements, fines and penalties that the taxpayer pays are never tax deductible, they aren't casualty or theft losses.

Settlements are sometimes deductible as business expenses if the situation that caused the settlement was part of a business activity (like a slip and fall accident in a store). In this case it would be handled on the business return, not the personal or estate return.