After determining the value of the gross estate, the law provides for various deductions in arriving at the value of the taxable estate.
Summary In Crestar Bank, et al. District Court held that an estate is not entitled to an income tax deduction pursuant to section c of the Code for the value of stock donated to a charitable trust because the estate did not pay an amount of its "gross income" to charity pursuant to the terms of the Will.
Linen, IV died on July 2, The IRS allowed the deduction, reducing the estate taxes paid by the Estate in In Decemberthe Estate filed an amended Fiduciary Income Tax Return for the Estate's tax year claiming a refund on the assertion that, under section c 1 of the Code, the Estate was entitled to a deduction from gross income for the Stock donated to the Trust.
The IRS denied the refund in May District Court for the Eastern District of Virginia stated that under the plain statutory language of section c 1"to establish entitlement to the deduction Additionally noting that Linen's Will expressly provided for the donation to the Trust to be made from principal, the Court held, the Estate cannot satisfy the second element and that the IRS properly rejected the claimed deduction.
The Court also relied on Subchapter J of the Code, which adopted a "conduit principle" of taxing estates. Quoting United States Trust Co. Beware -- the same legal standard applies to the income tax deduction to be taken, and relied upon, by a non-grantor charitable lead trust.
At the close of the bench trial in this action, the parties, at the instance of the Estate, were allowed to file post-trial briefs. Having considered the proposed findings of fact and conclusions of law, the evidence and arguments at trial, and the post-trial briefs, and for the reasons set forth below, judgment shall be entered in favor of the IRS because the deduction was properly disallowed.
Linen, IV died testate on July 2, I give and bequeath one-half of the Des Plaines Publishing Company stock owned by me at my death other than stock which I may have contracted to sell or redeem during my lifetime to the Des Plaines Publishing Charitable Trust established by my Declaration of Trust dated October 21,to be held and administered as a part of such Trust.
The Estate timely paid its reported income tax liability for the Tax Year. The basis for the claimed refund was the assertion that, under I.
The IRS denied the refund by letter dated May 28, The Estate has cited no authority for the construction of section c upon which it bases its claim for this deduction. Instead, the Estate contends that an entitlement to the deduction may be divined from certain facets of the decision in Old Colony Trust Co.
See United States v. Ron Pair Enterprises, Inc. Furthermore, because section c 1 creates a deduction, any effort to give effect to its plain language must be guided by the principle articulated in New Colonial Ice Co.
Section provides, in part: Thus, according to the statutory text, to establish entitlement to the deduction in this case, the Estate must prove that: The parties agree that, pursuant to the terms of the Will, the Estate made a gift of Des Plaines Publishing Company stock for a purpose specified in I.
However, the undisputed record in this case is that the Des Plaines Publishing Company stock was not part of the Estate's gross income for or for any other year, but was an asset owned by Linen on the date of his death. Because it is plain from the language of section c 1 that, to qualify as a deduction, the charitable gift must be made from an "amount of [the Estate['s] gross income," I.
Accordingly, the IRS properly rejected the claimed deduction.However, you can deduct the mortgage interest and real estate taxes that you paid for the property as part of your rental expenses. Additionally, you can take an annual depreciation deduction for the building over the life of the building.
View Notes - Chapter 4 - Deductions from Gross Estate from ACCOUNTING at University of California, Los Angeles.
The Estate Tax and Charitable Giving Summary Under current law, the federal estate tax will diminish through as rates fall and the amount of wealth ex-. The value of the gross estate of the decedent shall be determined by including to the extent provided for in this part, the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated. The term “debt-financed property” means any property with. Jul 16, · Deductions for estate and GST taxes under Code Sec. (c) that are allocable to NII are allowed as a properly allocable deduction. Expenses .
The Estate reported the value of that stock as $1,, and timely filed a Federal Estate Tax Return (Form ) in , claiming a charitable deduction from gross estate pursuant to I.R.C. section in the amount of $1,, /1/ The IRS allowed that deduction, thereby reducing the estate taxes paid by the Estate in The marital deduction is a valuable and flexible estate planning tool, but should not be overused.
The deduction can be combined with other tools to maximize the after-tax amount left to heirs and to ensure the heirs eventually receive the wealth. Deductions from Glossary of Tax Terms () by New Jersey Department of Treasury, Division of Taxation For Inheritance and Estate Tax purposes: Expenses you are allowed to subtract from the gross estate to reduce the amount of the taxable estate.
The executor of an estate is responsible for resolving a deceased person’s estate. Executors are entitled to collect a fee for the service; the amount varies by state.