My client died in Feb 2004. Her estate paid my 2003 tax prep fee in April 2004. On the 2004 Form 1040 the standard deduction was claimed. Therefore, shouldn't I claim my fee on Form 1041 as a deduction subject to 2%?
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Prep Fees
Sounds correct to me.This post is for discussion purposes only and should be verified with other sources before actual use.
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administrative expenses for an estate
Small Business Quickfinder page G-5 says tax return preparation fees for the 1041 are deductible on the 1041, line14 and are not subject to the 2% AGI limitation.
Then it says tax return preparation fees for the final 1040 are deducted as miscellaneous deductions subject to the 2% AGI limit.
The difference is that if the expense is only incurred due to the administration of the estate, it is not subject to the 2% limit. But if the expense would be incurred regardless of whether the estate existed or not, it is subject to the 2% limit. Tax prep fees for the decedent’s 1040 would have been incurred whether or not the taxpayer passed away. So they are subject to the 2% limit. The fees to prepare the 1041 are obviously due to the taxpayer’s death. So they are not subject to the 2% limit.Comment
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Prep Fees
BeesKnees, are you saying that both can be deducted on the 1041 but one is subject to 2% and the other is not?This post is for discussion purposes only and should be verified with other sources before actual use.
Many times I post additional info on the post, Click on "message board" for updated content.Comment
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yes
Yes, both are deducted on the 1041 because both were paid by the estate after the death of the decedent.Originally posted by BOB WComment
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