Question

Estate/Trust tax deductions

Forum|Forum|6 years ago
February 2, 2020
1 reply
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Is there is an error in the computations for distribution amounts for estates/trusts? My understanding is that 2019 IRS tax laws prohibit tax preparation fees as a deduction. If that is indeed the case, why does TurboTax prompt for the entry and then use it to reduce the total distrubution amount? I would think the information regarding the cost of tax prep fees is irelevant if it is not deductible and will ultimately have no impact on tax filing.

Any thoughts, or is someone able to clarify for me please?

Thank you.

A

Anonymous_

Employee

@snovitch wrote:
My understanding is that 2019 IRS tax laws prohibit tax preparation fees as a deduction.

That is not exactly the case.

Section 67(e) provides that deductions for costs which are paid or incurred in connection with the administration of the estate or trust and which would not have been incurred if the property were not held in such estate or trust.

See https://www.irs.gov/pub/irs-drop/n-18-61.pdf

Obviously, if the property were not held in an estate or trust, then a Form 1041 would not have been required to have been filed. Since a 1041 was required to be filed (because property was held in an estate or trust), the tax preparation fees are deductible on Form 1041.