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Form 1041 Fiduciary Fees Deduction?
I'm filling out a 1041 Form. My attorney itemized several fees in addition to his fees that he paid. Such as Court costs, Personal Representative's Bond, etc. Can I include these in the "Professional, accounting, and tax prep fees" section under Deductions?
And, I'm also not seeing much guidance on what to do with "Taxable income only" versus "Tax-exempt income only". Or how I would know.
The IRS publication 559 is pretty useless on helping with these two items.
Thanks in advance,
Randy
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Form 1041 Fiduciary Fees Deduction?
@Randman wrote:
Such as Court costs, Personal Representative's Bond, etc. Can I include these in the "Professional, accounting, and tax prep fees" section under Deductions?
Yes, those expenses would be deductible by the estate since they would not have been incurred by a hypothetical individual.
@Randman wrote:And, I'm also not seeing much guidance on what to do with "Taxable income only" versus "Tax-exempt income only".
You simply need to allocate the expenses between taxable income and tax-exempt income. For example, if you had $50 in expenses, $100 in taxable income, and $100 in tax-exempt income, you would allocate $25 of the expenses to taxable income and $25 in expenses to tax-exempt income.
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Form 1041 Fiduciary Fees Deduction?
@Randman wrote:
Such as Court costs, Personal Representative's Bond, etc. Can I include these in the "Professional, accounting, and tax prep fees" section under Deductions?
Yes, those expenses would be deductible by the estate since they would not have been incurred by a hypothetical individual.
@Randman wrote:And, I'm also not seeing much guidance on what to do with "Taxable income only" versus "Tax-exempt income only".
You simply need to allocate the expenses between taxable income and tax-exempt income. For example, if you had $50 in expenses, $100 in taxable income, and $100 in tax-exempt income, you would allocate $25 of the expenses to taxable income and $25 in expenses to tax-exempt income.
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Form 1041 Fiduciary Fees Deduction?
So for all fees (fiduciary, legal, accounting) you select "both" for taxable and/or tax exempt . This places the amount in the third column of the deduction allocation worksheet for 1041. It does not appear to affect the amount used for deduction.
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