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You may not deduct a bequest or costs, and costs of storing or claims to be deductible, all of the devise made to you instead of maintaining assets of the estate. following conditions must be met: commissions. If, however, the decedent • The decedent and the decedent’s The expenses of selling assets are fixed by will the compensation payable spouse must have entered into a deductible only if the sale is necessary to you for services to be rendered in the written agreement relative to their to pay the decedent’s debts, the administration of the estate, you may marital and property rights. expenses of administration, or taxes, or deduct this amount to the extent it is • The decedent and the spouse must to preserve the estate or carry out not more than the compensation have been divorced before the distribution. allowable by the local law or practice. decedent’s death and the divorce must have occurred within the 3-year period Do not deduct on this schedule Schedule K—Debts of beginning on the date 1 year before the amounts paid as trustees’ commissions agreement was entered into. It is not whether received by you acting in the the Decedent and required that the agreement be capacity of a trustee or by a separate approved by the divorce decree. Mortgages and Liens trustee. If such amounts were paid in • The property or interest transferred You must complete and attach administering property not subject to under the agreement must be Schedule K if you claimed deductions claims, deduct them on Schedule L. transferred to the decedent’s spouse in on either item 14 or item 15 of Part Note. Executors’ commissions are settlement of the spouse’s marital 5—Recapitulation. taxable income to the executors. rights. Therefore, be sure to include them as Income vs. estate tax deduction. You may not deduct a claim made income on your individual income tax Taxes, interest, and business expenses against the estate by a remainderman return. accrued at the date of the decedent’s relating to section 2044 property. death are deductible both on Schedule Section 2044 property is described in Attorney fees. Enter the amount of K and as deductions in respect of the the instructions to line 6. attorney fees that have actually been decedent on the income tax return of paid or that you reasonably expect to Include in this schedule notes the estate. be paid. If, on the final examination of unsecured by mortgage or other lien If you choose to deduct medical the return, the fees claimed have not and give full details, including: expenses of the decedent only on the been awarded by the proper court and • Name of payee, estate tax return, they are fully paid, the deduction will be allowed • Face and unpaid balance, deductible as claims against the estate. provided the Estate and Gift Tax • Date and term of note, If, however, they are claimed on the Territory Manager is reasonably • Interest rate, and decedent’s final income tax return satisfied that the amount claimed will be • Date to which interest was paid under section 213(c), they may not also paid and that it does not exceed a before death. be claimed on the estate tax return. In reasonable payment for the services Include the exact nature of the claim this case, you also may not deduct on performed, taking into account the size as well as the name of the creditor. If the estate tax return any amounts that and character of the estate and the the claim is for services performed over were not deductible on the income tax local law and practice. If the fees a period of time, state the period return because of the percentage claimed have not been paid at the time covered by the claim. limitations. of final examination of the return, the Example. Edison Electric amount deducted must be supported by Debts of the Decedent Illuminating Co., for electric service an affidavit, or statement signed under during December 2010, $150. the penalties of perjury, by the executor List under “Debts of the Decedent” only or the attorney stating that the amount valid debts the decedent owed at the If the amount of the claim is the has been agreed upon and will be paid. time of death. List any indebtedness unpaid balance due on a contract for secured by a mortgage or other lien on the purchase of any property included Do not deduct attorney fees property of the gross estate under the in the gross estate, indicate the incidental to litigation incurred by the heading “Mortgages and Liens.” If the schedule and item number where you beneficiaries. These expenses are amount of the debt is disputed or the reported the property. If the claim charged against the beneficiaries subject of litigation, deduct only the represents a joint and separate liability, personally and are not administration amount the estate concedes to be a give full facts and explain the financial expenses authorized by the Code. valid claim. Enter the amount in contest responsibility of the co-obligor. Interest expense. Interest expenses in the column provided. Property and income taxes. The incurred after the decedent’s death are deduction for property taxes is limited to Generally, if the claim against the generally allowed as a deduction if they the taxes accrued before the date of estate is based on a promise or are reasonable, necessary to the the decedent’s death. Federal taxes on agreement, the deduction is limited to administration of the estate, and income received during the decedent’s the extent that the liability was allowable under local law. lifetime are deductible, but taxes on contracted bona fide and for an Interest incurred as the result of a income received after death are not adequate and full consideration in federal estate tax deficiency is a deductible. money or money’s worth. However, any deductible administrative expense. enforceable claim based on a promise Keep all vouchers or original records Penalties are not deductible even if or agreement of the decedent to make for inspection by the IRS. they are allowable under local law. a contribution or gift (such as a pledge Allowable death taxes. If you elect to Note. If you elect to pay the tax in or a subscription) to or for the use of a take a deduction for foreign death taxes installments under section 6166, you charitable, public, religious, etc., under section 2053(d) rather than a may not deduct the interest payable on organization is deductible to the extent credit under section 2014, the the installments. that the deduction would be allowed as deduction is subject to the limitations a bequest under the statute that Miscellaneous expenses. described in section 2053(d) and its applies. Miscellaneous administration expenses regulations. If you have difficulty necessarily incurred in preserving and Certain claims of a former spouse figuring the deduction, you may request distributing the estate are deductible. against the estate based on the a computation of it. Send your request These expenses include appraiser’s relinquishment of marital rights are within a reasonable amount of time and accountant’s fees, certain court deductible on Schedule K. For these before the due date of the return to: -26- Part Instructions