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Trust creation expenses

 
 
MG
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      12-31-2010, 06:54 PM
The attorney that set up my Trust papers gave me a receipt and said it was
tax deductible.
Does this type of deduction fall under the 2% limitation rule?
Is there a particular place on the forms where must be entered?

Thanks

MG

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Stuart A. Bronstein
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      12-31-2010, 07:30 PM
"MG" <(E-Mail Removed)> wrote:

> The attorney that set up my Trust papers gave me a receipt and
> said it was tax deductible.
> Does this type of deduction fall under the 2% limitation rule?
> Is there a particular place on the forms where must be entered?


Actually your attorney is only partly right. To the extent what he
did for you was tax planning, it is deductible. The portion dealing
with estate planning (other than tax planning) is not.

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Stu
http://downtoearthlawyer.com

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<< The foregoing was not intended or written to be used, >>
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Mark Bole
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      12-31-2010, 07:39 PM
On 2010/12/31 10:54, MG wrote:
> The attorney that set up my Trust papers gave me a receipt and said it was
> tax deductible.
> Does this type of deduction fall under the 2% limitation rule?
> Is there a particular place on the forms where must be entered?



Personal legal expenses, such as creating a will or "living" trust, are
not deductible.

Here's what is deductible, according to Pub 529:

"You can usually deduct legal expenses that you incur in
attempting to produce or collect taxable income or that you
pay in connection with the determination, collection, or
refund of any tax."

So if the creation of your trust was for the purpose of generating
current taxable income, then some of the expense might be deductible, as
long as it is stated separately from any other legal expenses of the
trust. In that case, the expense would go on the trust income tax
return, Form 1041.

-Mark Bole

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Pico Rico
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      12-31-2010, 07:56 PM

"Stuart A. Bronstein" <(E-Mail Removed)> wrote in message
news:Xns9E5F750ADA26Dspamtraplexregiacom@130.133.4 .11...
> "MG" <(E-Mail Removed)> wrote:
>
>> The attorney that set up my Trust papers gave me a receipt and
>> said it was tax deductible.
>> Does this type of deduction fall under the 2% limitation rule?
>> Is there a particular place on the forms where must be entered?

>
> Actually your attorney is only partly right. To the extent what he
> did for you was tax planning, it is deductible. The portion dealing
> with estate planning (other than tax planning) is not.



I know this is true, but where do you draw the line between tax planning and
estate planning? For example, if it weren't for death taxes, I would not
do any estate planning, just write a will or a do it yourself trust to avoid
probate. But the real estate planning I will need is due to the existence
(now and then) of death taxes.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
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Mark Bole
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      12-31-2010, 08:02 PM
On 2010/12/31 11:30, Stuart A. Bronstein wrote:
> "MG"<(E-Mail Removed)> wrote:
>
>> The attorney that set up my Trust papers gave me a receipt and
>> said it was tax deductible.
>> Does this type of deduction fall under the 2% limitation rule?
>> Is there a particular place on the forms where must be entered?

>
> Actually your attorney is only partly right. To the extent what he
> did for you was tax planning, it is deductible. The portion dealing
> with estate planning (other than tax planning) is not.
>


Upon reading Stu's reply, I found the following document which
elaborates some of the conditions for deductibility:

http://www.epcchattanooga.org/Chatta...eductibl%2Edoc

(if the above link doesn't work, go to www.epcchattanooga.org and search
the document library under "Wills & Trusts").

The key in all cases is to accurately break out the tax-planning related
costs from other personal costs. For a revocable trust ("living
trust"), such expenses will end up decreasing your taxable income if you
itemize on Schedule A and then only to extent the expenses exceed 2% of
your AGI.


-Mark Bole

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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
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Arthur Kamlet
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      12-31-2010, 08:06 PM
In article <iflbg3$m9r$(E-Mail Removed)-september.org>,
Pico Rico <(E-Mail Removed)> wrote:
>
>"Stuart A. Bronstein" <(E-Mail Removed)> wrote in message
>news:Xns9E5F750ADA26Dspamtraplexregiacom@130.133. 4.11...
>> "MG" <(E-Mail Removed)> wrote:
>>
>>> The attorney that set up my Trust papers gave me a receipt and
>>> said it was tax deductible.
>>> Does this type of deduction fall under the 2% limitation rule?
>>> Is there a particular place on the forms where must be entered?

>>
>> Actually your attorney is only partly right. To the extent what he
>> did for you was tax planning, it is deductible. The portion dealing
>> with estate planning (other than tax planning) is not.

>
>
>I know this is true, but where do you draw the line between tax planning and
>estate planning? For example, if it weren't for death taxes, I would not
>do any estate planning, just write a will or a do it yourself trust to avoid
>probate. But the real estate planning I will need is due to the existence
>(now and then) of death taxes.



It's really not your decision to allocate how much the att'y charged
for each service.


The att'y's invoice should do that.
--

ArtKamlet at a o l dot c o m Columbus OH K2PZH

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<< ------------------------------------------------------- >>
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<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
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Stuart A. Bronstein
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      12-31-2010, 08:23 PM
"Pico Rico" <(E-Mail Removed)> wrote:

>> Actually your attorney is only partly right. To the extent
>> what he did for you was tax planning, it is deductible. The
>> portion dealing with estate planning (other than tax planning)
>> is not.

>
> I know this is true, but where do you draw the line between tax
> planning and estate planning? For example, if it weren't for
> death taxes, I would not do any estate planning, just write a
> will or a do it yourself trust to avoid probate. But the real
> estate planning I will need is due to the existence (now and
> then) of death taxes.


Personally, I determine what I would have charged for planning that
included no tax issues at all, compared with the cost with tax
planning. It's generally between a third and a half, seems to me.

--
Stu
http://downtoearthlawyer.com

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
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dpb
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      12-31-2010, 10:36 PM
Arthur Kamlet wrote:
....

> It's really not your decision to allocate how much the att'y charged
> for each service.
>
> The att'y's invoice should do that.


Only invoice(s) I ever got were hrsXrate=invoiced total for the overall
work.

--

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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Pico Rico
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      12-31-2010, 10:37 PM

"Stuart A. Bronstein" <(E-Mail Removed)> wrote in message
news:Xns9E5F7E0B23709spamtraplexregiacom@130.133.4 .11...
> "Pico Rico" <(E-Mail Removed)> wrote:
>
>>> Actually your attorney is only partly right. To the extent
>>> what he did for you was tax planning, it is deductible. The
>>> portion dealing with estate planning (other than tax planning)
>>> is not.

>>
>> I know this is true, but where do you draw the line between tax
>> planning and estate planning? For example, if it weren't for
>> death taxes, I would not do any estate planning, just write a
>> will or a do it yourself trust to avoid probate. But the real
>> estate planning I will need is due to the existence (now and
>> then) of death taxes.

>
> Personally, I determine what I would have charged for planning that
> included no tax issues at all, compared with the cost with tax
> planning. It's generally between a third and a half, seems to me.



My point is but for the tax planning effort, I could do the will or simple
trust myself at no cost.

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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Stuart A. Bronstein
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      12-31-2010, 11:07 PM
dpb <(E-Mail Removed)> wrote:
> Arthur Kamlet wrote:
> ...
>
>> It's really not your decision to allocate how much the att'y
>> charged for each service.
>>
>> The att'y's invoice should do that.

>
> Only invoice(s) I ever got were hrsXrate=invoiced total for the
> overall work.


Then none of it's deductible.

--
Stu
http://downtoearthlawyer.com

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
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