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benefit of the estate (such as in schedule. List them on Schedule L How To Complete Schedule I discharge of the estate’s liability for instead. In describing an annuity, give the name death taxes or debts of the decedent, The deduction is limited to the and address of the grantor of the etc.) or that its distribution will be amount paid for these expenses that is annuity. Specify if the annuity is under governed to any extent by the terms of allowable under local law but may not an approved plan. the decedent’s will or the laws of exceed: descent and distribution. IF . . . THEN . . . 1. The value of property subject to If data available to you does not claims included in the gross estate, plus indicate whether the plan satisfies the the annuity is under an state the ratio of the 2. The amount paid out of property approved plan, decedent’s contribution requirements of section 401(a), 403(a), included in the gross estate but not to the total purchase 408(a), 408(b), or 409(a), you may subject to claims. This amount must price of the annuity. obtain that information from the IRS actually be paid by the due date of the office where the employer’s principal estate tax return. the decedent was state the ratio of the place of business is located. employed at the time of decedent’s contribution The applicable local law under which death and an annuity as to the total purchase Line A. Lump Sum the estate is being administered described in Definitions, price of the annuity. Distribution Election Annuity, Example 4, determines which property is and is not above, became payable subject to claims. If under local law a Note. The following rules have been to any beneficiary particular property interest included in repealed and apply only if the because the beneficiary the gross estate would bear the burden survived the decedent, decedent: for the payment of the expenses, then • On December 31, 1984, was both a the property is considered property an annuity under an state the ratio of the participant in the plan and in pay status subject to claims. individual retirement amount paid for the (for example, had received at least one account or annuity individual retirement Unlike certain claims against the benefit payment on or before December became payable to any account or annuity that estate for debts of the decedent (see 31, 1984) and had irrevocably elected beneficiary because that was not allowable as an the instructions for Schedule K), you the form of the benefit before July 18, beneficiary survived the income tax deduction cannot deduct expenses incurred in decedent and is payable under section 219 (other 1984, or to the beneficiary for life than a rollover administering property subject to claims • Had separated from service before or for at least 36 months contribution) to the total on both the estate tax return and the January 1, 1985, and did not change following the decedent’s amount paid for the estate’s income tax return. If you the form of benefit before death. death, account or annuity. choose to deduct them on the estate Generally, the entire amount of any tax return, you cannot deduct them on lump sum distribution is included in the the annuity is payable the description should a Form 1041, U.S. Income Tax Return decedent’s gross estate. However, out of a trust or other be sufficiently complete for Estate and Trusts, filed for the fund, to fully identify it. under this special rule, all or part of a estate. Funeral expenses are only lump sum distribution from a qualified deductible on the estate tax return. (approved) plan will be excluded if the the annuity is payable include the duration of Funeral expenses. Itemize funeral lump sum distribution is included in the for a term of years, the term and the date expenses on line A. Deduct from the on which it began. recipient’s income for income tax expenses any amounts that were purposes. reimbursed, such as death benefits the annuity is payable include the date of birth If the decedent was born before payable by the Social Security for the life of a person of that person. 1936, the recipient may be eligible to Administration and the Veterans other than the decedent, elect special “10-year averaging” rules Administration. (under repealed section 402(e)) and the annuity is wholly or enter the amount Executors’ commissions. When you capital gain treatment (under repealed partially excluded from excluded under file the return, you may deduct section 402(a)(2)) in figuring the income the gross estate, “Description” and commissions that have actually been tax on the distribution. For more explain how you figured paid to you or that you expect will be information, see Pub. 575, Pension and the exclusion. paid. You may not deduct commissions Annuity Income. If this option is if none will be collected. If the amount available, the estate tax exclusion of the commissions has not been fixed cannot be claimed unless the recipient by decree of the proper court, the elects to forego the “10-year averaging” Schedule J—Funeral deduction will be allowed on the final and capital gain treatment in figuring Expenses and Expenses examination of the return, provided that: the income tax on the distribution. The • The Estate and Gift Tax Territory recipient elects to forego this treatment Incurred in Manager is reasonably satisfied that the by treating the distribution as taxable commissions claimed will be paid; on his or her income tax return as Administering Property • The amount entered as a deduction described in Regulations section Subject to Claims is within the amount allowable by the 20.2039-4(d). The election is laws of the jurisdiction where the estate irrevocable. General. You must complete and file is being administered; and Schedule J if you claim a deduction on The amount excluded from the gross • It is in accordance with the usually item 13 of Part 5—Recapitulation. estate is the portion attributable to the accepted practice in that jurisdiction for employer contributions. The portion, if estates of similar size and character. On Schedule J, itemize funeral any, attributable to the expenses and expenses incurred in employee-decedent’s contributions is If you have not been paid the administering property subject to always includible. Also, you may not commissions claimed at the time of the claims. List the names and addresses figure the gross estate in accordance final examination of the return, you of persons to whom the expenses are with this election unless you check must support the amount you deducted payable and describe the nature of the “Yes” on line A and attach the name, with an affidavit or statement signed expense. Do not list expenses address, and identifying number of the under the penalties of perjury that the incurred in administering property recipients of the lump sum distributions. amount has been agreed upon and will See Regulations section 20.2039-4. not subject to claims on this be paid. -25- Part Instructions