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  1. #1

    Default Deductibility of Trust Administration Expenses

    My question involves estate proceedings in the state of: California
    I'm having trouble getting answers from my Tax Prep - EA on various deductions during administration of my deceased father's estate. Since the residence was not sold in 2017, and there was some income to the estate, I'm hoping to find a not-so-easy-to-find complete list of deductible expenses to the 2017 return.
    Special circumstances...as Successor Trustee I've had to make multiple trips out of state to his residence, either by flying or driving trips. For the record, I stayed at the residence about 3 months cumulatively during year for administration. Deductibility of specific expenses include:
    Flight expenses to and from for Trustee,
    Flight expenses to and from for sibling's division of tangible assets,
    Fuel to and from, driving of Trustee,
    Meal expenses during administration by Trustee,
    Relocation costs of tangible assets,
    Shipping costs of tangible assets.

    Any input is appreciated.

  2. #2
    Join Date
    Sep 2010
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    19,669

    Default Re: Deductibility of Trust Administration Expenses

    Read this: https://www.irs.gov/irb/2014-22_IRB#TD-9664

    Generally, the costs are deductible to the trusts, some many be subject to a 2% cap.

  3. #3
    Join Date
    Oct 2006
    Posts
    16,195

    Default Re: Deductibility of Trust Administration Expenses

    Quote Quoting edkrane
    View Post
    My question involves estate proceedings in the state of: California
    I'm having trouble getting answers from my Tax Prep - EA on various deductions during administration of my deceased father's estate. Since the residence was not sold in 2017, and there was some income to the estate, I'm hoping to find a not-so-easy-to-find complete list of deductible expenses to the 2017 return.
    Special circumstances...as Successor Trustee I've had to make multiple trips out of state to his residence, either by flying or driving trips. For the record, I stayed at the residence about 3 months cumulatively during year for administration. Deductibility of specific expenses include:
    Flight expenses to and from for Trustee,
    Flight expenses to and from for sibling's division of tangible assets,
    Fuel to and from, driving of Trustee,
    Meal expenses during administration by Trustee,
    Relocation costs of tangible assets,
    Shipping costs of tangible assets.

    Any input is appreciated.
    How much income did the estate actually have?...and what kind of income was it?

  4. #4
    Join Date
    Nov 2013
    Posts
    6,888

    Default Re: Deductibility of Trust Administration Expenses

    Quote Quoting edkrane
    View Post
    My question involves estate proceedings in the state of: California
    I'm having trouble getting answers from my Tax Prep - EA on various deductions during administration of my deceased father's estate. Since the residence was not sold in 2017, and there was some income to the estate, I'm hoping to find a not-so-easy-to-find complete list of deductible expenses to the 2017 return.
    Special circumstances...as Successor Trustee I've had to make multiple trips out of state to his residence, either by flying or driving trips. For the record, I stayed at the residence about 3 months cumulatively during year for administration. Deductibility of specific expenses include:
    Flight expenses to and from for Trustee,
    Flight expenses to and from for sibling's division of tangible assets,
    Fuel to and from, driving of Trustee,
    Meal expenses during administration by Trustee,
    Relocation costs of tangible assets,
    Shipping costs of tangible assets.

    Any input is appreciated.
    Sounds like you are looking for deductions for your personal income tax return. Most of the expenses you listed would be costs associated with the administration of the trust and as such, should be deducted on the estate or trust tax return. Have you or are you intending to file the trust return and have you gotten the tax ID for the trust?

  5. #5
    Join Date
    Jan 2006
    Posts
    38,867

    Default Re: Deductibility of Trust Administration Expenses

    Flight expenses to and from for sibling's division of tangible assets,
    do you mean paying for a beneficiaries expenses to come and pick up his distributed assets of the trust?



  6. #6

    Default Re: Deductibility of Trust Administration Expenses

    Income was gain on an annunity disbursement directly to the Trust, plus the sale of an art item, the proceeds of which have gone directly to bill payments of the Trust. About $60K.

    Yes. A flight from another state.

    Yes to all the above. Filing a 2017 Tax return for the Trust.

  7. #7
    Join Date
    Sep 2010
    Posts
    19,669

    Default Re: Deductibility of Trust Administration Expenses

    The sales price of the artwork isn't "income" itself, but it may reflect a capital gain. Depending on the nature of the trust, that art may have stepped up in basis at the grantor's death making the sale probably not a taxable issue. Even without that, the sales price isn't the entirety of the gain (the art must have cost something to begin with). The annuity likely is.

  8. #8

    Default Re: Deductibility of Trust Administration Expenses

    thanks for the link.

    Thanks. I feel a bit guilty asking repeated questions on this forum. Good help is hard to get these days, even with experienced and busy tax prep people. Practically everyone in the businessplace seems understaffed. Hard to get specific answers.

  9. #9
    Join Date
    Jan 2006
    Posts
    38,867

    Default Re: Deductibility of Trust Administration Expenses

    The costs paid by the trust for purposes of administration are generally deductible, of course within any limits imposed by law. I suspect your issue is less about valid deductions when filing the trust’s return but more of what is a legitimate cost you can charge the trust. That is an entirely different section of law. If the beneficiaries are limited to you and your brother there is less chance of any payments made by the trust being challenged, at least as long as your brother doesn’t disagree with such payments. If a beneficiary objects to expenditures of the trust, then you need to be able to legally defend them. The expenditure of flying your brother to and fro seems a bit odd, to me anyway. Of course I have no idea what the rules of the trust are or what may iustify such an expense in your situation .



    You also need to be concerned with how any payments made to you affect your tax return. If you are compensated for administering the trust, it is income to you. Other payments to you would have to be considered based on what it was and what it was for.

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