topic Estates final return and allocating extra deductions in Business & farm

Estates final return and allocating extra deductions

Wondr — Sat, 01 Feb 2025 08:37:48 GMT

On a final Estate return do the extra deductions have to be allocated the same as disbursements? Example…One beneficiary has taxable income on their personal return while the other beneficiary does not. Can the beneficiary that could utilize the extra deductions have it all allocated to them or does it have to be split 50/50?

Re: Estates final return and allocating extra deductions

M-MTax — Sat, 01 Feb 2025 12:41:45 GMT

See this article

Excess deductions are going to retain their character as attached to a particular class of income.

Re: Estates final return and allocating extra deductions

Wondr — Sat, 01 Feb 2025 17:56:55 GMT

I’m asking about allocation of these deductions to the beneficiaries. If the extra deductions would not be beneficial to a beneficiary can they allow the other beneficiary the entirety of the extra deductions on their K1?

Re: Estates final return and allocating extra deductions

M-MTax — Sat, 01 Feb 2025 19:51:39 GMT

No, not under typical circumstances. Merely because a certain beneficiary cannot use the final year deductions does not justify allocating all of those deductions to a beneficiary who can use them.