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Member
 
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Last Login: 6/25/2007 3:50:45 PM
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| Can ongoing expenses for repairs, maintenance and insurance for income producing rental real estate be deducted on the 706 as administration expenses necessary for the preservation and conservation of estate property? Or, do they have to be deducted on the 1041 against the rental income? Thanks for your input.
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Member
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Last Login: 8/30/2010 8:41:47 AM
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| Richard, These could be considered estate management expenses and deductable on the 706. If chargeable to the marital share and deducted on the 706, the marital deduction has to be reduced by a like amount, thus you won't receive any reduction of estate taxes on the first to die. You are normally better off deducting them on the fiduciary income tax return. However you may still wish to deduct them on the 706 as it reduces the amount going to the marital interest and thus reducing the estate of the second to die. If charged to the marital share but attributable to property being distributed to someone else it will reduce the martial deduction and should be normally deducted on the 706 otherwise you may create a taxable estate.
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Member
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Last Login: 6/25/2007 3:50:45 PM
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| Thank you John. This is a second to die taxable estate so we might be able to save some money if we deduct the expenses on the 706 vs. the 1041. Richard Cassidy
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Member
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Last Login: 8/30/2010 8:41:47 AM
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| Richard, that makes it a lot easier. The other comment that I might add is that your deduction would be limited to those expenses incurred in period that it would normally take to administer the estate and transfer the assets to the heirs.
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