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Estate Administrator Fee/Income

Question: I received a one-time fee for administering my deceased father's estate. All the info I have found clearly says this is reported on 1040 Line 21 as "Other Income."

However, I also have some out-of-pocket expenses against that one-time income -- travel mileage, postage, phone, supplies -- and do not know where I reduce this sort of other income by my expenses.

Form 8903 does NOT seem the right place (and it is absurdly dense/ confusing). Can I just put a "net" total other income on Line 21? If not, where do I show these minimal expenses on a sensible form for that? Thanks in advance!

Reply to
Kathleen Martin
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You seem not to be a person in the trade or business of administering estates. So the payment you received for that work goes on Line 21 and the allowed expenses on Scheddule A Line 23.

Reply to
Arthur Kamlet

Schedule A - Miscellaneous subject to the 25 of AGI floor.

========================================= MODERATOR'S COMMENT: Typo: Mr Stussy seems to mean "2%"

Reply to
D. Stussy

She was in the trade or business for several months for the purpose of that one estate. Why couldn't she use a Schedule C?

On the other hand, out of pocket costs should have been paid by the estate. And reimbursements should not be taxable to OP.

___ Stu

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Reply to
Stuart A. Bronstein

Form 8903 is for Domestic Production Activities Deduction. Did you mean some other form?

The IRS wouldn't object to a Schedule C I'm sure; however why should she pay self-employment (SE) tax of over 13% (normally 15.3%) if she wasn't truly self-employed? She doesn't meet any of the exceptions to SE tax for Schedule C filers.

As she was the administrator of the estate, I guess she should complain to herself for not reimbursing herself from the estate. But if in fact the estate didn't reimburse her, then I think she's stuck with the limited expense deduction on Schedule A.

Reply to
Mark Bole

The use of Schedule C for estate executors is meant for those who regularly perform that function (e.g. court-appointed trustees for the probate of those with no close living relatives), not for the occasional (i.e. one-time) use by a close relative of the deceased.

Reply to
D. Stussy

I respectfully disagree - she was NOT in the trade or business of being an executor or personal rep because she doesn't do it on a "regular and continuous basis." The ONLY reason she did it in this case was because of her close relationship. THAT makes it an entirely different situation.

NOW, if she acted as a personal rep for strangers, much the way accountants and attorneys take on work for non-friends or non-family members, THEN she'd be in a trade or business.

Agreed - and this may be nothing more than fixing the book entries by rebooking payment to her that were for expenses as expenses and NOT as payments to her. That way the books reflect that only the payments to her were for fiduciary fees and the other payments to her for reimbursements.

As a side note, and one of my pet peeves - this is exactly what happens in most DIY cases. Someone, with the best of intentions, does a job in half-hearted manner, resulting in confusion and ugly records that can easily wind up costing several times more than the professional fees had professional help been retained at the start.

Gene E. Utterback, EA, RFC, ABA

Reply to
Gene E. Utterback, EA, ABA

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