Administration expense from revocable trust not deductible

Article Abstract:

The authors discuss the Tax Court 1999 memorandum case Estate of Grant where the court denied an estate tax deduction for a revocable trust's administration expenses related to claims for executors' commissions and those primarily benefiting beneficiaries.

Tax Deductions & Exemptions, Tax deductions, Revocable trusts

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Later expenses reduce underpayment penalty

Article Abstract:

The Tax Court in Estate of Trompeter allowed the estate to take an expense deduction for expenses incurred computing the IRS-imposed multimillion dollar fraud penalty which the court previously upheld. The court interpreted IRC section 6663(a) and other sections to reach an apparently logical conclusion. However, Congress should amend the law to assure that in clear cases of fraud, such results cannot occur. It is inequitable that the government cannot recoup some of its costs discovering and remedying fraud because persons are allowed to deduct the expenses incurred in defending and ultimately losing those cases.

Tax Evasion & Penalties, Decedents' estates, Tax penalties

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Benefit of section 6166 flows from janitorial services provided for rental realty

Article Abstract:

The IRS in Letter Ruling 9832009 provides guidance regarding the active ownership requirement of IRC section 6166 in the context of rental real estate. That section contains an estate tax deferral exception for qualified closely held businesses. Active businesses are factually distinguished from passive ownership by the level of business activity by participants other than independent contractors or lessees.

Tax Law, Close corporations, Closely held corporations, Leases

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