For an estate tax return, can i deduct expenses of administering the estate on line 15a of form 1041?

[ron6612]

This is an explanation by IRS in deduction of administrative expenses on 1041. These administrative expenses are related to disposal of furnishings from my mothers apartment after she passed away from Covid in a Federal and State national emergency declaration. These expenses would not have been incurred if not for the national emergency. I was planning on entering them into TurboTax Business as other administrative expenses and having them roll up into line 15 a of 1041. The IRS instructions below indicate that preparer can include their own statement of the expenses. Does TurboTax Business provide option to generate such a statement or schedule that would be part of the eFiling?

Line 15a—Other Deductions

Attach your own statement, listing by type and amount all allowable deductions that aren't deductible elsewhere on Form 1041.

• Allowable deductions include all deductions listed in section 67(b) (including estate taxes attributable to IRD under section 691(c)), and other costs allowable under section 67(e) paid or incurred in connection with the administration of the estate or trust that would not have been incurred if the property were not held in the estate or trust.

[tagteam]

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@ron6612 wrote:

...Does TurboTax Business provide option to generate such a statement or schedule that would be part of the eFiling?

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See the screenshot below which, apparently, includes the statement referenced in your post.

[ron6612]

Thank you! If I understand correctly the Business software would generate the schedule of administrative expenses form electronically along with the other forms required for filing?

[tagteam]

@ron6612 

Yes, I believe that to be the case but, frankly, it is more expeditious to complete the statement in Forms Mode.

[ron6612]

And would the statement completed in forms mode go to IRS within the eFile submission?  Also, do you know when Business download for Microsoft will be available to purchase?

[ron6612]

You’ve been very helpful but I might not have been clear on another part of my questions. After my mom passed away due to COVID her family was not allowed into her apartment to clean out her apartment. We had to pay a contractor authorized by the facility to do that. We instructed him as to what belongings should be taken to charities and what items should be sent to family members. The expenses to do all of the clean out and distribution work was around $8,000.There was also a casualty loss of jewelry that is allowed since Florida was declared a national disaster zone due to COVID. 

My mom had a Revocable Trust that describes how all of her assets were to be distributed. The trust also had income from an annuity payment. 

My question is does the experience of cleaning up and distribution of belongings quality as a deductible “other expense “ on form 1041 that would offset some of the annuity ordinary income?

[tagteam]

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@ron6612 wrote:

My question is does the experience of cleaning up and distribution of belongings quality as a deductible “other expense “ on form 1041 that would offset some of the annuity ordinary income?

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It should because the cost incurred would not commonly or customarily would be incurred by a hypothetical individual holding the same property.

[ron6612]

Here’s another question and answer from tax expert about TurboTax Business providing for a statement that will be part of the 1041 eFile. Please advise that this statement is available. 

From tax expert:
It should be a statement created within your tax preparation software, and yes, you should include it with the 1041.

To tax expert:. as we are not filing a 706, does any statement related to waiving administrative expenses need to be filed with IRS (for example with 1041) or is the manual statement kept with our records enough?  I think you answered this below but just wanted to make sure. Plus, not sure how a manual statement could even be attached to 1041 if eFile.

[tagteam]

@ron6612 

Below are a couple of screenshots of the statement that you would manually attach (if filing by mail) to your 1041 or is e-filed if you elect to e-file the return. Either way, this statement needs to be attached.

[Critter-3]

@tagteam 

Nice screenshots but they are hard to read ... you can enlarge the window on the right so it is easier to see. 

[tagteam]

Hopefully, the screenshots below are more readable (I used a better image editor and just copied the actual form instead of the entire screen).

[ron6612]

Do you guys work for TurboTax as this portal is the only way to get answers on Business. The support representatives are not trained on the software and can’t put me in touch with anyone directly to get answers. This is the approach they recommended to me. 

[Critter-3]

Sadly but all the TT programs are really DIY situations and unless you really know what you are doing on a business return one should seek local professional assistance.  TT support has only a few technicians who know business returns so your chance of getting one of them without an escalation of the issue is low.  Best you will get is help with technical program  issues not tax laws. 

[ron6612]

So you have to assume that the software will handle most any estate or business situation without being able to get the answer from support?  For the fit is user of Business it’s hard to automatically rely on that assumption. The lack of support is not what one would expect from such a major supplier of tax software!

[Critter-3]

The program has lots of Learn More helps along the way but if that will not do enough then getting answers directly from the IRS publications and/or the form instructions will be the alternative to paying a local tax pro for the first return so you can be educated on what you don't know ...  then come back to the DIY program.