Excess deductions on termination of an estate or trust

Technical topics regarding tax preparation.
#1
Skatter  
Posts:
319
Joined:
15-Dec-2014 7:47pm
Location:
Boston area
The final version of 2018 Instructions for Form 1041, pg. 39, indicate that excess deductions on the closing return of an estate or trust are entered in Box 11 of the K-1 with a Code "A." The last sentence of the specific instructions for Box 11A state "An individual beneficiary must be able to itemize deductions in order to claim the excess deductions in determining taxable income." That sentence and the prior discussion lead me to believe the Box 11A amount should be deducted by an individual beneficiary on line 16 (Other Itemized Deductions) of the 2018 Sch A if she is able to itemize. However, the 1040 draft Instructions (12/11/18), pg. A-11, for line 16 add a CAUTION! that says: " Only the expenses listed next can be deducted on line 16." Nine specific expenses are identified but don't include excess deductions. They should be included, shouldn't they? Or have I missed something?
 

#2

#3
Jake  
Posts:
1393
Joined:
12-May-2014 3:19pm
Location:
Columbus, Ohio
Clear that those misc deductions are allowed on the 1041, unclear if still o.k. on Beneficiaries 1040 as an "Excess Deduction on Termination".
 

#4
HowardS  
Posts:
2866
Joined:
21-Apr-2014 3:12pm
Location:
Southern Pines, NC
According to thetaxadvisor.com, date Dec 1, 2018:
Until further guidance is issued, it appears the IRS will be taking the position that excess deductions on termination are not currently deductible by beneficiaries.


AICPA submitted comments in October recommending these not be considered misc itemized deductions. I don't know if we'll see any guidance based on that recommendation.
Retired, no salvage value.
 


Return to Taxation



Who is online

Users browsing this forum: AZ CPA, batjudge, CaptCook, DaleGMac14, DavidG, IDunnoItDepends, Jeff-Ohio, JR1, MikeH, Nightsnorkeler, Pitch78, rbynaker, rdk70, rkrcpa, TAXMASTER, UnlicensedTaxPro and 141 guests