Expenses of administering an estate can be deducted either from the gross estate in figuring the federal estate tax on Form 706
(PDF), United States Estate (and Generation-Skipping Transfer) Tax Return, or from the estate's gross income in figuring the estate's income tax on Form 1041
(PDF), U.S. Income Tax Return for Estates and Trusts.
However, these expenses cannot be claimed for both estate tax and income tax purposes.
In most cases this rule also applies to expenses incurred in the sales of property by the estate. For more information, refer to Publication 559
, Survivors, Executors, and Administrators, designed to help those in charge of the property (estate) of an individual who has died. Also, refer to Publication 950
, Introduction to Estate and Gift Taxes.
In general, administration expenses deductible in figuring the estate tax include: fees paid to the fiduciary for administering the estate; attorney, accountant, and return preparer fees; expenses incurred for the management, conservation, or maintenance of property; expenses in connection with the determination, collection, or refund of the estate's tax liability.