Discussion:Deductibility of T/B Liability for Cash-basis Taxpayer in Year of Death
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| Revision as of 23:26, 3 November 2009 JohnMcG329 (Talk | contribs) (New Discussion) ← Previous diff |
Revision as of 23:36, 3 November 2009 Kevinh5 (Talk | contribs) (I'd say DRD on t) Next diff → |
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Revision as of 23:36, 3 November 2009
Discussion Forum Index --> Advanced Tax Questions --> Deductibility of T/B Liability for Cash-basis Taxpayer in Year of Death
Discussion Forum Index --> Tax Questions --> Deductibility of T/B Liability for Cash-basis Taxpayer in Year of Death
JohnMcG329 (talk|edits) said: | 3 November 2009 |
| A client of mine recently passed away. He was an attorney who filed a Schedule C as a sole proprietor on a cash basis.
His assets were included in a Revocable Trust. Upon his passing, I became Trustee. In the year before his passing, he settled a malpractice case under the following terms: My client was to pay $100,000 to the plaintiff (plus accrued interest) on the passing of my client. This $100,000 liability was secured by a lien on real property. My question: Can I take the $100,000 deduction on his 2009 1040 if the claim was paid during calendar year 2009, or is it necessarily a 1041 deduction as it was paid after the date of death? Generally, I would think it is deductible under the trust, due to timing of a cash basis taxpayer. However, I am not sure because of issues regarding legal judgements and liabilities existing when cash-basis trade/businesses terminate. Thanks in advance for your input. | |
