How do I deduct the administration expenses of my father's estate? ALABAMA'S #1 TAX SERVICE

The expenses incurred by an estate for its administration can either be deducted as an expense against the estate and generation-skipping transfer (GST) tax or the annual income tax against the estate.

• You may deduct the expense from the gross estate in figuring the federal estate tax on Form 706 (PDF), United States Estate (and Generation-Skipping Transfer) Tax Return, or
• You may deduct the expense from the estate's gross income in figuring the estate's income tax on Form 1041 (PDF), U.S. Income Tax Return for Estates and Trusts.
• However, these expenses cannot be claimed for both estate tax and income tax purposes.
• In most cases this rule also applies to expenses incurred in the sales of property by the estate. For more information, refer to Publication 559, Survivors, Executors, and Administrators, designed to help those in charge of the property (estate) of an individual who has died. Also, refer to Publication 950, Introduction to Estate and Gift Taxes.

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