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Warren's Heaton on Surrogate's Court Practice
Copyright 2017, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

10-161 Warren's Heaton on Surrogate's Court Practice 161.syn


Expenses, Debts, and Losses on Estate Tax Return


Linda B. Hirschon, Greenberg Traurig, New York;Andrew L. Martin, Esq. Chief Court Attorney--Referee, Surrogate's Court, Nassau County;Eugene E. Peckham, Surrogate, Broome County;C. Raymond Radigan, Chairman, EPTL-SCPA Legislative Advisory Committee;Joshua S. Rubenstein;Peter N. Wells, former Surrogate, Onondaga County;* Chapter 161 was updated by Jill L. Miller, Jill Miller & Associates, PC, New York, NY.

Chapter Summary


Expenses, debts, and losses are reported on Schedules J, K, and L of the federal estate tax return (Form 706). This chapter, from Warren's Heaton on Surrogate's Court Practice (Matthew Bender), covers proper reporting of these deductions, including: funeral expenses and expenses incurred during estate administration with respect to property subject to claims; debts owed by the decedent, including mortgages and liens against the decedent's property; losses from casualty theft; and expenses for administering property not subject to claims. The chapter also covers practice consideration for achieving maximum tax savings. In addition, the chapter addresses Form ET-90 of the New York estate tax return, which essentially mirrors the federal return.

The chapter first discusses the relationship between income and estate tax. Substantial tax savings may be achieved by computing where deductions are most beneficially claimed. While funeral expenses are only allowed as an estate tax deduction, an expense incurred for the production of income is, for example, also deductible for income tax purposes. The chapter explains considerations for the executor when choosing whether a particular deduction is best taken on the estate income tax return, the decedent's income tax return or on a beneficiary's income tax return. In addition, the chapter discusses the effect of shifting deductions, which may result in discriminatory tax burden between income and principal beneficiaries.

In New York, the amount of the executor's commission is fixed by statute, but the chapter explains when amounts in excess are allowed, and the interaction of the provision with local law. The chapter further addresses when amounts paid to trustees may be deductible. The amount of attorneys' fees which will be allowed as a deduction is governed by the reasonableness of the fees and whether they have been incurred for the benefit of the estate, and the chapter explains the importance of recordkeeping since excess fees are often denied. Administration expenses must be "actually and necessarily incurred in the administration of the decedent's estate" and the chapter covers when they will be disallowed, and further covers deduction of interest expenses when an estate borrows funds to pay taxes, expenses related to a stock offering, expenses for the preservation and maintenance of property, and interest paid on a charitable bequest.

Claims against the estate are generally allowed as a deduction if bona fide, but certain requirements must be met and the chapter reviews issues arising in cases related to loans to a close corporation, and agreements pursuant to a judgment of divorce. In addition, the chapter covers the deductibility of certain death taxes, limitations on the amount deductible against estate tax for administration expenses and debts, and deductions for losses and casualties.

Warren's Heaton on Surrogate's Court Practice (Matthew Bender) provides comprehensive coverage and analysis of New York Probate and Estates practice issues. Accepted by the courts as the leading authority on practice in Surrogate's Court, topics include jurisdiction, intestacy, probate, appointment of representatives and guardians, estate administration, fiduciary duties, accounting, commissions and fees, litigation, Federal and New York estate tax, and construction of wills and trusts. The treatise covers case law affecting substance and procedure; analysis of SCPA, EPTL, and related statutes; procedural guidance; and over 1,000 forms including official New York Surrogate's Court Forms and current Federal and New York estate tax forms with explanations. The treatise also covers Reformation and Trust-splitting issues, Supplemental Needs Trusts, Uniform Transfers to Minors, and Revocable Living Trusts.


New York surrogate's court,surrogate's court in New York,estate tax return,federal estate tax return,expenses on estate tax return,debts on estate tax return,losses on estate tax return,deductible funeral expenses


For an overview of the estate tax, see Chapter 151, Basic principles of the Federal Estate Tax. See also Chapter 175, New York Estate Tax.


For a comprehensive guide to the federal estate tax return, see How to Save Time and Taxes Handling Estates (Matthew Bender).

For further coverage of estate and gift taxation, see Modern Estate Planning (Matthew Bender).

For federal tax considerations when drafting wills, see Drafting New York Wills: Law and Forms (Matthew Bender).

For tax saving techniques in estate planning, see Planning for Large Estates (Matthew Bender).

For annual analysis of developments in estate planning and estate, gift and income taxation, see Heckerling Institute on Estate Planning--University of Miami School of Law (Matthew Bender).
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