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<p class="MsoNormal"><span style="font-size:15.0pt;font-family:"Garamond",serif">Let’s assume that the house is sold on the open market a few months after the date of death, through the services of a professional real estate broker. That sale usually determines
the fair market value of the residence, and it is not unreasonable to use that sale price as the fair market value on the estate tax return and as the post-mortem income tax basis of the residence. But how are the broker’s commission, the title insurance
premium, and related closing costs handled for tax purposes? The expenses of sale are usually not deductible on an estate tax return under §2053(a)(2) or against ordinary income for fiduciary income tax purposes. Instead, those expenses are offsets against
the selling price to reduce gain or to increase loss. <i>Scull v. Commissioner</i>, T.C. Memo 1994-211, n. 14. But because the sale price is also the basis, offsetting those closing costs will produce a capital loss.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:15.0pt;font-family:"Garamond",serif">Phil Jones<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:15.0pt;font-family:"Garamond",serif">Portland
</span><span style="font-size:14.0pt;font-family:"Times New Roman",serif"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
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<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">Philip N. Jones<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">Duffy Kekel LLP<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">900 S.W. Fifth Ave. Suite 2500<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">Portland, OR 97204<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif"><a href="mailto:pjones@duffykekel.com"><span style="color:#0563C1">pjones@duffykekel.com</span></a><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">(503) 226-1371 – office<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">(503) 853-1482 – cell<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:14.0pt;font-family:"Times New Roman",serif">(503) 226-3574 - fax<o:p></o:p></span></p>
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<p class="MsoNormal"><b>From:</b> wsbapt-bounces@lists.wsbarppt.com <wsbapt-bounces@lists.wsbarppt.com>
<b>On Behalf Of </b>Sara D. Longley<br>
<b>Sent:</b> Thursday, March 4, 2021 1:46 PM<br>
<b>To:</b> 'WSBA Probate & Trust Listserv' <wsbapt@lists.wsbarppt.com><br>
<b>Subject:</b> [WSBAPT] WA estate tax deduction question<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Hello listmates,<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">I’m preparing a WA estate tax return, and of course the PR would like to deduct expenses relating to getting the real estate ready for sale. Taxes and utilities are deductible since they go to maintaining the asset, but the instructions
seem to disallow expenses of selling (Realtor fees, etc) unless “the sale is necessary to pay the decedent’s debts, the expenses of administration, or taxes, or to preserve the estate or carry out distribution.”
<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">There are two beneficiaries and the value of the real estate is less than half of the estate value, so the sale is not technically necessary to divide the estate, nor are the sale proceeds needed to cover debts, taxes, or other expenses.
<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Is there any reasonable basis on which to claim the expenses relating to the real estate sale are allowable deductions from the estate?<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Many thanks in advance for your sage advice!<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Best,<o:p></o:p></p>
<p class="MsoNormal">Sara Longley<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">Sara D. Longley<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">Ivy Law Group, PLLC<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">1734 NW Market Street<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">Phone: (206) 706-2909<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">Fax: (206) 834-6044<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1F497D"><a href="mailto:sara@ivylawgroup.com">sara@ivylawgroup.com</a><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">Pronouns: she, her, hers<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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