Charitable Deduction for Estate

[Yrags]

I am preparing a decedent's estate (1041). For one of his retirement funds, he designated a charitable institution as the beneficiary. This is not noted in his will. The charity accepted the money (of course) and issued a thank you letter.

There are capital gains due to a home sale in the estate. Can part of the contribution be used to offset the taxable income? I'm dubious, but it would be great if it could.

Thanks in advance!

[DANRVAN]

3 hours ago, Yrags said:

designated a charitable institution as the beneficiary. This is not noted in his will. T

Off the top of my head, I am going to say probably not.

 

First of all I don’t think it would be allowed since it was not spelled out in the will.

 

Secondly, I don’t believe the retirement account would be included in the gross estate of the decedent.  It should be excluded as a charitable deduction regardless of whether a 706 was filed.

 

Therefore, if it was not part of the estate, I don't think the estate is not entitled to take a deduction on 1041.

[DANRVAN]

32 minutes ago, DANRVAN said:

I don't think the estate is not entitled to take a deduction on 1041.

 

Please forgive my double negative error, that should have read "don't think the estate is entitled."

[Burke]

You are correct in that, since the charitable organization was a named beneficiary of the retirement fund, it is not part of the estate, and it is not considered on the 1041 in any way.  It's the same as if an IRA named a person as a beneficiary -- not part of the estate.   On the sale of the home calculation, it got a stepped up basis at owner's death, so if it was sold shortly thereafter, there should be no gain.  There actually may be a loss due to expenses of sale, such as real estate commissions paid, legal fees, administrative fees, taxes, etc.  (Do not include any items related to a mortgage.)  Review the HUD-1/settlement statement carefully regarding real estate taxes debits/credits.  See page 2 of HUD-1 for details, seller's column.  

[Burke]

PS:  The real estate tax debit/credit transfers from/to buyers and sellers will be shown on Page 1 of the settlement statement.  There are almost always transfers shown unless the settlement date is exactly the same date the tax is due.  

[Yrags]

5 hours ago, Burke said:

You are correct in that, since the charitable organization was a named beneficiary of the retirement fund, it is not part of the estate, and it is not considered on the 1041 in any way.  It's the same as if an IRA named a person as a beneficiary -- not part of the estate.   On the sale of the home calculation, it got a stepped up basis at owner's death, so if it was sold shortly thereafter, there should be no gain.  There actually may be a loss due to expenses of sale, such as real estate commissions paid, legal fees, administrative fees, taxes, etc.  (Do not include any items related to a mortgage.)  Review the HUD-1/settlement statement carefully regarding real estate taxes debits/credits.  See page 2 of HUD-1 for details, seller's column.  

Thank you, and everyone. I assumed that the contribution was not deductible for the reasons mentioned, but wanted to make sure.

The house was sold over a year after death, in an area with high home values and appreciation. It was not appraised at death so the gain has some flexibility, but there is definitely gain even with the expenses. I was also hoping that the $250,000 exclusion still applied to estates, but that was repealed over 10 years ago, lol.