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Discussion Forum Index --> Tax Questions --> Form 1041 Legal fees for a will contest
Krispy0966 (talk|edits) said:
| 2 October 2007
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| Are legal fees paid by an estate that was a defendant in a will contest deductible?
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Riley2 (talk|edits) said:
| 2 October 2007
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| Expenses paid or incurred in defending or perfecting title to property must be added to the basis of property. See Reg. § 1.212-1(k).
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Dennis (talk|edits) said:
| 2 October 2007
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| I disagree. That would be true for an individual's expense, however for an estate the legal fees paid to defend contest are administrative, deductible on the 706.
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Riley2 (talk|edits) said:
| 3 October 2007
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| Since Krispy asked about the Form 1041, I gave him the rule for income taxes only. Krispy, if you are also preparing a Form 706, Dennis is correct in telling you that the expenses of a will contest paid by the estate would be deductible on the 706.
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Dennis (talk|edits) said:
| 3 October 2007
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| I still disagree. Deductions allowable under Sec. 2053(a)(2) are subject to election under Sec. 642(g). Bear in mind that the estate is defending the will, not asserting rights to property.
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Blrgcpa (talk|edits) said:
| 3 October 2007
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| You may not know the total amount of the legal fees by the time the estate return is filed. I'd put any add'l expense on the 1041.
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Riley2 (talk|edits) said:
| 3 October 2007
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| Agree with Dennis that not all defendants in will contests are asserting rights to property. In fact, an estate involved in a will contest is probably not asserting rights to property.
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Dennis (talk|edits) said:
| 3 October 2007
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| Reg. 20.2055-3 Although I don't really think the co-ordination between §2053 and §212 is done very well.
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