Prepaid funeral expenses?


T

toller

My 87 year old aunt paid for her funeral prior to going on
medicaid (or medicare; I get them confused, but you know
what I mean.)

Can these expenses be deducted anywhere?
 
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P

Paul A Thomas

toller said:
My 87 year old aunt paid for her funeral prior to going on
medicaid (or medicare; I get them confused, but you know
what I mean.)

Can these expenses be deducted anywhere?
Not from your income tax returns.
 
D

David Woods, EA, ChFC, CLU

toller said:
My 87 year old aunt paid for her funeral prior to going on
medicaid (or medicare; I get them confused, but you know
what I mean.)

Can these expenses be deducted anywhere?
As what?
 
D

D. Stussy

toller said:
My 87 year old aunt paid for her funeral prior to going on
medicaid (or medicare; I get them confused, but you know
what I mean.)

Can these expenses be deducted anywhere?
Form 706.
 
D

David Woods, EA, ChFC, CLU

D. Stussy said:
toller wrote:
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....
 
D

Drew Edmundson

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....
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.
 
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M

MTW

toller said:
Can these expenses be deducted anywhere?
No, not for income tax purposes. Note that some prepaid
funeral plans actually pass through INCOME that must be
reported pro rata by the participants in the plan.

MTW
 
D

D. Stussy

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....
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.
 
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D

D. Stussy

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.
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! :)
 

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