Prepaid funeral expenses?

"toller" wrote

Not from your income tax returns.

-- Paul A. Thomas, CPA Athens, Georgia taxman at negia.net

Form 706.

While I agree that's the only place these expenses are ever deductible, I would have a hard time taking them there in THIS instance....seeing as how the taxpayer is still living. Technically the money is already out of the estate anyway....

-- David M. Woods, EA, ChFC, CLU Woods Financial Services Norwood, MA 02062

I would guess (and that is all it is) that one would include the value of the prepaid funeral expense as an asset on Form

706 and then as a deduction. Nets to zero but I expect it is proper as the value before deductions is the one used to determine whether the estate has to file or not.

Where in IRC 2053(a)(1) does it say that the funeral expenses have to come from funds includible in gross estate? It only says that a deduction shall be allowed against gross estate - and here, it is the decedent taxpayer who did pay the amount. I don't see that it matters that he paid it BEFORE passing or after.

I agree that "prepaid expenses" constitute assets. However, it's not obvious (but very well may be) that it nets to zero, especially when a pre-paid cemetery plot is considered. [Often, a couple will buy a plot together so they can be buried together - and there could be a discount factor involved.] All I'm saying is that a zero-net can't be accepted until further thought and I'm "brain dead" right now! :-)