Can I take an estate tax deduction on the 1099r?

[Duckduckgoose]

Error check on turbo tax is telling me to fill in a taxable amount on the 1099-R. On my form the amount not determined box is checked. This is a gross distribution from an inherited IRA (from my father) and is a RMD. This was taxed as part of his estate and 45% of the amount is deductible, although it's swallowed up by the standard deduction. As an alternative can I subtract the 45% from the gross distribution and enter it in the taxable amount box? 

[SweetieJean]

Is the 1099-R made out to you personally, or to Dad's Estate.

[Duckduckgoose]

It reads my name INH IRA BENE OF my dad's name. Also, I noticed that the taxable amount box 2a had the full amount from box 1. That's why I was getting the error. I'm guessing it's not cool to take the deduction here ...

[SweetieJean]

@dmertz  Can you help?

[dmertz · Accepted solution]

A Form 1099-R for a distribution from a inherited traditional IRA is required to have the gross amount in box 1, the same amount in box 2a, box 2b Taxable amount not determined marked, code 4 in box 7 and the IRA/SEP/SIMPLE box marked.  You must enter the Form 1099-R exactly as received.  If your dad had no basis in nondeductible traditional IRA contributions, the entire amount is includible in your AGI.

The estate tax deduction for IRD is taken on Schedule A line 16.  (For an estate tax deduction of 45% of the IRD, your dad must have died before 2010 when the maximum estate tax rate was at least 45%.)  In TurboTax, go to Deductions & Credits -> Other Deductions and Credits -> Other Deductible Expenses.  Continue to the page titled Did you have any of these other expenses? and click Yes.  In the box labeled Estate tax deduction not reported on an estate K-1, enter 45% of the taxable amount of the IRA distribution (45% of the entire distribution if there is no basis in nondeductible traditional IRA contributions).

If your itemized deductions are less then the standard deduction, you cannot realize this deduction.

[Duckduckgoose]

This is perfect. Thank you for your detailed instructions and analysis.