Estate expenses

[Catherine]

What to do? Estate income tax returns, lots of pieces remain to be tidied up before the thing shuts down. The estate expenses were used on the MA state estate tax form as deductions, but there was no federal estate tax. 

Is there any reason I cannot take these expenses at the federal level for the estate income return? 

I could see that using the estate expenses on the state's estate income tax form might be considered double-dipping on the expenses, but even then to pay income tax on income that was properly used to pay estate expenses seems odd as well. Had those expenses been paid out before the estate return was filed, I'd have taken them without blinking. Am I over-thinking this? (Yes, I am over-thinking this, and have over-thunked myself into complete confusion!)

I've been all over the MassDOR (useless piece of garbage) site and found nothing germane.

[Sara EA]

What expenses are you talking about?  Is this a 1041 or 706?

Items that are deductible on individual federal 1040s are often deductible on state returns as well (e.g., classroom expenses and student loan interest).  Some aren't (e.g., bonus depreciation in nonconforming states).  You're not really deducting it twice; it's just that some states allow certain deductions and not others, just like the federal allows some and not others.  Two separate taxing authorities.

[Catherine]

One is a Massachusetts 706-equivalent ($1M exclusion in MA not the federal $11+M), and estate income 1041.

Sorry that I was not clear, @Sara EA - it was clear in my head!

[Sara EA]

Some expenses can be deducted on both returns.  Other expenses can be deducted on one or the other but not both.  I can't be of more help without knowing what expenses you're talking about. Best to look at the 706 instructions line by line for each expense.

I do a lot of estates but have only done one 706 in my long career.  (Not counting the one that was the final exam for one of my Master degree courses.)  Same as you, the state had a lower requirement than the federal but required a proformaed Federal 706 attached.  It was NOT fun.

[DANRVAN]

On 3/17/2023 at 2:49 PM, Catherine said:

Is there any reason I cannot take these expenses at the federal level for the estate income return? 

If federal form 706 has not or will not be filed, you should not have any limitation to claiming them on form 1041 for the estate.

 

Are you filing a "1041" at the state level?

 

Oregon basically follows the federal code for estates; so you cannot claim the same deductions on both OR-706 and OR-41.

 

Off the top of my head, I can not thing of any deduction that would be allowed on both federal forms 706 and 1041; no double dipping!

 

[Catherine]

That was my thought, @DANRVAN - take the deductions on the 1041, but leave them off on the state return. Attorney fees, mainly.

[Catherine]

Thanks to all who chimed in!