Form 1041

[TAX4US]

In view of the recent service issues to address 1041 deductions could someone point me in the correct direction.

Ins and utilities paid by the fid during administration until house gets passed out to heirs for sale. 2% or not or not at all?

Travel expences of Ex to qualify and clean up house site along with getting rid of personal property. 2% or not?

Tax prep fees paid for final 1040. 2% or not.

Rest of this 1041 I have a good handle on it. I am just drawing a brain cramp. Thanks

[Kram BergGold]

My view

Assuming that the house id empty or rented then I would deduct all that you list as 2% deductions with one caveat. The Estate would have to reimburse the executor for his or her expenses to make then deductible.

[Burke]

Note that certain fees are fully deductible on Line 12, Fiduciary Fees, Line 14, Attorney or Legal Fees, Accounting Fees to Courts, and Return Preparer Fees --these would be for the preparation of Estate and GST returns, Fiduciary returns (1041), and the decedent's final individual income tax return (1040.) Appraisal fees for the valuing of estate assets are fully deductible as well as fiduciary expenses incurred such as probate court costs, surety bond prems, legal notices, death certificates, etc. All these are deemed not normal expenses an individual would incur.

Travel expenses of the executor/administrator should be covered by his/her Fiduciary Fee for handling the estate. The Executor Fee is taxable income to the fiduciary. If no fee is being paid, then I would include that in the "fiduciary expenses" as fully deductible, as they are being incurred solely in the role of Executor. Investment Advisory Fees for estate assets are subject to the 2% exclusion (first allocating between taxable and tax-exempt income.) Likewise, any normal expense for the maintenance of property held in an estate is also subject to the 2% exclusion. See Supreme Ct decision 1/16/08 and IRS final regulations for tax years beginning after May 9, 2014. (If the property is rented, then you complete a Rental Schedule E and it goes on Line 5 of Form 1041.)
See http://www.thetaxadvisor.com/issues/...ell-aug14.html for a discussion of these issues.

You say however, that the property is to be "passed out to the heirs for sale?" Does the estate have the power to sell per the will? Or does it pass through to the heirs immediately on death? (See will or your state law regarding how real estate is to be handled).