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  • 1.  final 1041

    Posted 01-20-2016 05:23 PM

    in doing a final 1041 for an estate there are deductions in excess of income. The will named 2 individuals who received specific bequests. There were 4 residual beneficiaries - all of whom are charities. How are the excess deductions in the final year allocated to the beneficiaries?

    Choices:

    1 only to the charities

    2 elect to distribute to the specific beneficiaries

    3 allocated to all beneficiaries as to their share of distributions

    Thank you for your help.

    garygoldbergcpa@yahoo.com

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    Gary M. Goldberg
    CPA
    GARY GOLDBERG, CPA
    Bellmore NY
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  • 2.  RE: final 1041

    Posted 01-21-2016 11:26 AM

    I assume that the estate is sufficient to pay the specific bequests in full. If that is the case, then any economic loss would be borne only by the charitable beneficiaries because there are are no deficiencies in the amounts the beneficiaries of the specific bequests are to receive.  Thus, under IRC section 642(h), the excess deductions would only be allocable to the charitable beneficiaries.  The economic burden of loss principle is the guide as to allocation of excess deductions. See Treas. Reg. section 1.942(h)-4, et seq.




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