Instructions For Form 706 - United States Estate (And Generation-Skipping Transfer) Tax Return Page 33
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55deduction will be allowed on the final
beneficiaries. These expenses are
General. Complete and file Schedule J
examination of the return, provided that:
charged against the beneficiaries
if you claim a deduction on item 14 of
The Chief, Estate and Gift Tax, is
personally and are not administration
Part 5—Recapitulation.
reasonably satisfied that the
expenses authorized by the Code.
On Schedule J, itemize funeral
commissions claimed will be paid;
Interest expense. Interest expenses
expenses and expenses incurred in
The amount entered as a deduction is
incurred after the decedent's death are
administering property subject to
within the amount allowable by the laws
generally allowed as a deduction if they
claims. List the names and addresses of
of the jurisdiction where the estate is
are reasonable, necessary to the
persons to whom the expenses are
being administered; and
administration of the estate, and
payable and describe the nature of the
It is in accordance with the usually
allowable under local law.
expense. Do not list expenses
accepted practice in that jurisdiction for
incurred in administering property
Interest incurred as the result of a
estates of similar size and character.
not subject to claims on this
federal estate tax deficiency is a
If you have not been paid the
schedule. List them on Schedule L
deductible administrative expense.
commissions claimed at the time of the
instead.
Penalties on estate tax deficiencies are
final examination of the return, you must
not deductible even if they are allowable
The deduction is limited to the
support the amount you deducted with
under local law.
amount paid for these expenses that is
an affidavit or statement signed under
allowable under local law but may not
the penalties of perjury that the amount
Note. If you elect to pay the tax in
exceed:
has been agreed upon and will be paid.
installments under section 6166, you
1. The value of property subject to
You may not deduct a bequest or
may not deduct the interest payable on
claims included in the gross estate, plus
devise made to you instead of
the installments.
2. The amount paid out of property
commissions. If, however, the decedent
Miscellaneous expenses.
included in the gross estate but not
fixed by will the compensation payable
Miscellaneous administration expenses
subject to claims. This amount must
to you for services to be rendered in the
necessarily incurred in preserving and
actually be paid by the due date of the
administration of the estate, you may
distributing the estate are deductible.
estate tax return.
deduct this amount to the extent it is not
These expenses include appraiser's
more than the compensation allowable
The applicable local law under which
and accountant's fees, certain court
by the local law or practice.
the estate is being administered
costs, and costs of storing or
Do not deduct on this schedule
determines which property is and is not
maintaining assets of the estate.
amounts paid as trustees' commissions
subject to claims. If under local law a
The expenses of selling assets are
whether received by you acting in the
particular property interest included in
deductible only if the sale is necessary
capacity of a trustee or by a separate
the gross estate would bear the burden
to pay the decedent's debts, the
trustee. If such amounts were paid in
for the payment of the expenses, then
expenses of administration, or taxes, or
administering property not subject to
the property is considered property
to preserve the estate or carry out
claims, deduct them on Schedule L.
subject to claims.
distribution.
Unlike certain claims against the
Note. Executors' commissions are
Schedule K—Debts of the
estate for debts of the decedent (see
taxable income to the executors.
the instructions for Schedule K), you
Decedent and Mortgages
Therefore, be sure to include them as
cannot deduct expenses incurred in
and Liens
income on your individual income tax
administering property subject to claims
return.
on both the estate tax return and the
Use Schedule PC to make a
Attorney fees. Enter the amount of
estate's income tax return. If you choose
protective claim for refund for
!
attorney fees that have actually been
to deduct them on the estate tax return,
expenses which are not
paid or that you reasonably expect to be
CAUTION
you cannot deduct them on a Form
currently deductible under section 2053.
paid. If, on the final examination of the
1041, U.S. Income Tax Return for
For such a claim, report the expense on
return, the fees claimed have not been
Estate and Trusts, filed for the estate.
Schedule K but without a value in the
awarded by the proper court and paid,
Funeral expenses are only deductible
last column.
the deduction will be allowed provided
on the estate tax return.
You must complete and attach
the Chief, Estate and Gift Tax
Funeral expenses. Itemize funeral
Schedule K if you claimed deductions
Examinations, is reasonably satisfied
expenses on line A. Deduct from the
on either item 15 or item 16 of Part
that the amount claimed will be paid and
expenses any amounts that were
5—Recapitulation.
that it does not exceed a reasonable
reimbursed, such as death benefits
payment for the services performed,
Income vs. estate tax deduction.
payable by the Social Security
taking into account the size and
Taxes, interest, and business expenses
Administration or the Veterans
character of the estate and the local law
accrued at the date of the decedent's
Administration.
and practice. If the fees claimed have
death are deductible both on
not been paid at the time of final
Executors' commissions. When you
Schedule K and as deductions in
examination of the return, the amount
file the return, you may deduct
respect of the decedent on the income
deducted must be supported by an
commissions that have actually been
tax return of the estate.
affidavit, or statement signed under the
paid to you or that you expect will be
If you choose to deduct medical
paid. Do not deduct commissions if
penalties of perjury, by the executor or
expenses of the decedent only on the
none will be collected. If the amount of
the attorney stating that the amount has
estate tax return, they are fully
the commissions has not been fixed by
been agreed upon and will be paid.
deductible as claims against the estate.
decree of the proper court, the
Do not deduct attorney fees
If, however, they are claimed on the
incidental to litigation incurred by the
Part Instructions
-33-
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