Benjamin Yazersky CPA wrote:
- quote -

Taxable and Tax-Exempt: All the interest was mortgage
interest and no allocation to tax exempt was made. The taxes
paid (property and the last of the FL intangibles tax) were
all allocated to taxable income. Charitable deduction was
allocated between the two. Attorney fees were also
allocated between the two. All the misc. itemized expenses
relating to the investment property were only allocated to
taxable income.

Expenses not deducted (allocated to principal) included
funeral expenses, moving expenses and outstanding health and
rehab bills of the decedent.

Sound about right?

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"A.G. Kalman" <agkdisposable-mtm2[at]yahoo.com> wrote:

- quote -

expenses have to be allocated

between pricnipal & income
between taxable & tax exempt income

- quote -

should be deductible-to maintain & preserve the assets of
the trust

- quote -

If the real property is FL & the decedent resided there, it
is probably a FL trust Check CA laws - in some states a
resident trustee can create a filing requirement. (my
expertise is w/NJ & NY fiduciary requirements)

Had a situation in my office recently where NY settlor
created an irrevocable trust with a NJ resident trustee -
all intangible assets wound up with no state fiduciary
return - no NY sourced assets & a NJ trustee in no way
created a connection (nexus) w/NJ

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] > > -----> real address on hobokeni or hobokenx <-----

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I'm helping my son prepare the first 1041 for an irrevocable
trust that came into existence upon the death of the
grantor, a Florida resident. It is a complex trust. This is
not my area of expertise. The issue I am wrestling with is
the allocation of certain expenses and whether they should
be allocated to principal or allocated to income and be
deducted as a Misc. Itemized deduction.

The decedent's residence is now investment property. It is
up for sale and has not been rented. The house is in a
community that has an association that takes care of the
common area. There are various assessments and special
assessments for maintenance and repairs to the common area
and clubhouse. There were repairs to the house. There are
utility expenses for the house. There is also a large
vacant home insurance expense.

I have allocated all these expenses to trust income and
deducted them as being ordinary and necessary expenses paid
for the management, conservation, or maintenance of property
held for the production of income. This is the IRC Sec. 212
definition.

As an aside for you Californians: Does anyone know if a
trust return needs to be filed in CA because the trustee is
a CA resident? The trust was formed in Florida for a FL
resident who died in FL.

Comments please.

P.S. I did tell him to hire a professional to handle this.

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