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Old 01-25-2017, 04:12 PM
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for a 1041 closing down

A question regarding closing a 1041. While the final year is to be TY ended 12/31/16 and all will be distributed in Jan/Feb (65 day rule), there is a large attorney fee owed of $35,000, which is being paid end of January (now). Is there any way this can be used on the 2016 return although paid in early 2017. Seems this is a common situation on shutting down and while attorneys and accts I've talked to claim it's deductible and usable in 2016, from what I've read it is NOT under Section 663 (65 day rule) which seems to pertain to beneficiary distributions. Does anyone have solid backup that this is indeed deductible and any citing of authority? Thanks so much!



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Old 01-26-2017, 07:12 AM
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Originally Posted by taxsoldier View Post
A question regarding closing a 1041. While the final year is to be TY ended 12/31/16 and all will be distributed in Jan/Feb (65 day rule), there is a large attorney fee owed of $35,000, which is being paid end of January (now). Is there any way this can be used on the 2016 return although paid in early 2017. Seems this is a common situation on shutting down and while attorneys and accts I've talked to claim it's deductible and usable in 2016, from what I've read it is NOT under Section 663 (65 day rule) which seems to pertain to beneficiary distributions. Does anyone have solid backup that this is indeed deductible and any citing of authority? Thanks so much!


Correct; it is not subject to Sec 663 . The answer is, in the year of payment (assuming they are deductible). I mean on your 2017 return When filing Form 1041 for a decedent, estate, or trust, you must determine how to deduct administration fees. Deductions for attorney, accountant, and preparer fees are limited on Sch A of Form 1040. the deduction will be subject to the 2 % of AGI exclusion, where only amounts greater than 2% of AGI can be deducted on your return;



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