topic 1041 Estate Return - are all attorney and accountant fees deductable? Is State estate tax paid deductable? in Business & farm

1041 Estate Return - are all attorney and accountant fees deductable? Is State estate tax paid deductable?

Matilda — Fri, 11 Feb 2022 02:06:19 GMT

I am completing a 1041 for my father's estate. I was ready to enter my attorney fees and accounting fees paid in 2021 for my father's estate. TT asks to separate between Fees allocated to taxable income and fees allocated to tax exempt income. What does this mean? The fees were for preparing tax returns, and for legal guidance administrating the estate.

The largest accounting fee was for preparation of the State Estate Tax return - is this deductable? And - on a longshot - is the amount paid for state estate tax deductable?

Re: 1041 Estate Return - are all attorney and accountant fees deductable? Is State estate tax paid deductable?

Anonymous_ — Fri, 11 Feb 2022 02:20:10 GMT

You do not deduct estate taxes on Form 1041.

See https://www.irs.gov/instructions/i1041#en_US_2021_publink1000286135

You can deduct fees incurred for the preparation of estate income tax returns on Form 1041.

See https://www.irs.gov/instructions/i1041#en_US_2021_publink100077445

Re: 1041 Estate Return - are all attorney and accountant fees deductable? Is State estate tax paid deductable?

Anonymous_ — Fri, 11 Feb 2022 02:28:29 GMT

@Matilda wrote:

......TT asks to separate between Fees allocated to taxable income and fees allocated to tax exempt income. What does this mean?

You only need to be concerned with allocation if the estate received tax-exempt income.

See https://www.irs.gov/instructions/i1041#en_US_2021_publink100077445

Re: 1041 Estate Return - are all attorney and accountant fees deductable? Is State estate tax paid deductable?

Matilda — Fri, 11 Feb 2022 04:15:31 GMT

Thank you