Estate or Income Tax Deductions

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In computing the taxable estate of an individual on Form 706 or computing the taxable income of an estate on Form 1041, expenses of administration under IRC Sec. 2053(a)(2) or expenses of loss during the administration of the estate under Sec. 2054 may be deducted on either return but not on both.

While each situation is different, presumably these deductions would be taken on the return where their use would yield the greater tax benefit. For instance, where an estate has no transfer tax liability due to a marital deduction, these deductions would probably be more beneficial on the estate's income tax return rather than on the estate tax return.

If the decision is made to …