K-1 - Form 1041

[peggysioux]

Taxpayer received K-1 (form 1041) for first and final return of 1041 for parent's revocable trust that became irrevocable at death. Trust return shows income of $2500 and expenses of $20,000. $10,000 of the expenses are for final disposition costs. There was an excess of deductions that carried to K-1 which became deductible on taxpayer's individual return. Are the burial expenses deductible by the beneficiary?

[peggysioux]

I found in the instructions for the 1041 that funeral expenses are only deductible on form 706. The tax preparer who handled the trust return has a couple deductions on line 15a of the 1041 that I would not deem as deductible, i.e. care giver expenses and final disposition costs. The tax preparer did not make the 645 election and marked as a simple trust with initial and final return checked. Are there exceptions that I might be missing that would allow for these types of deductions?

[Kram BergGold]

What!

Burial Costs are not a deduction on Form 1041. They have nothing to do with income or corpus.

[Burke]

Neither are the caregiver expenses. If they were paid within one year of death, they can be deducted on the deceased's final 1040 as they are considered paid when incurred in this instance. The preparer should correct the 1041 return as they cannot be passed through to the bene's as expenses on termination.