Volume 1, Number 3
|Table of Contents|
Estate of: ____________________________________
Tax Periods: _________________________________
1. Are administration expenses duplicated on the 1041 and 706?
2. Are broker's commissions deducted from the proceeds of sale (or as an adjustment to basis) on the form 1041 schedule D?
a. If yes, are they also deducted on the 706?
3. Is the estate deducting expenses or reporting income attributable to property that was specifically bequeathed or jointly owned?
4. If an adjustment to the value of property has been made on the 706, has a corresponding adjustment been made to the basis of the property for purposes of sale or depreciation?
5. If the estate has sold or liquidated property, were sufficient steps taken by the decedent before death so that the proceeds of sale or liquidation are IRD?
a. If yes, was the decedent's basis before death and not the value per the 706 used on the 1041?
6. Did the estate make a distribution of capital gains (on other than the sale of unproductive assets or natural resources)?
7. Has the estate received the following items or IRD:
a. salary, fees, compensation, alimony?
b. accrued dividends and interest?
c. increment on U.S. Savings Bonds?
d. accrued interest on flower bonds?
e. royalty income?
f. death benefits?
g. mortgages or note receivables of an installment obligation?
If yes, were these items reported on both the 706 and 1041?
8. If the decedent was a partner and he died before the end of the partnership's taxable year, has the estate allocated the income between the IRD portion and the non-IRD portion?
9. Pecuniary Bequests: Were they funded with items of appreciated property, including such IRD items as installment obligations?
10. Fractional Bequests: Has there been a non-pro rata funding of this bequest among the several beneficiaries?
11. Has there been a sale, transfer, or cancellation of an installment obligation received from the decedent?
12. In computing the estate tax deduction (691c), has an adjustment been made for:
a. DRD items (691b)?
b. the § 1202 deduction?
c. the martial and charitable deductions?
d. the allocation between estate and beneficiaries?
13. Charitable Deduction: Is it authorized under the governing instrument (e.g., decedent's will) for an exclusive charitable purpose?
14. Was an income distribution deduction taken for a distribution to beneficiaries of a trust under the decedent's will by the Estate?
15. Was an income distribution deduction taken for a distribution to a split-interest charitable trust?
16. Was there a 1041 pick-up?
Caution: An affirmative answer to questions 1, 2a, 3, 6, 9, 10, 11, 14, or 15; or a negative answer to questions 4, 5a, 7a, 8, 12, or 13 indicate that you will have a possible audit issue.
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