Get Revenue Procedure 1998-15 - Underpayment Interest; Interest Expense Deduction; Estates.. Procedures

Individuals are not allowed to deduct for federal income tax purposes interest paid on any deferred federal estate and generation-skipping taxes.

Interest on Underpayments of Tax The interest rate on underpayments, determined under IRC § 6621, is set at 3 percent over the federal short-term rate for most taxpayers and 5 percent over the federal short-term rate on underpayments of over $100,000 by C corporations (see Explanation: §6621, Interest Rates).

Summary A deduction for a personal exemption equal to $600 for estates, $300 for simple trusts, and $100 for complex trusts; A deduction for distribution of taxable income to beneficiaries; The determination of deductible administration expenses; A reduced deduction for expenses allocated to tax-exempt income;

Interest is earned only on the overpayment of tax. The interest rate allowed on refunds is equal to the federal discount rate set by the Federal Reserve Board on each January 1, not to exceed 7%.

What deductions are available to reduce the estate tax? Charitable deduction: If the decedent leaves property to a qualifying charity, it is deductible from the gross estate. Mortgages and debt. Administration expenses of the estate. Losses during estate administration.

Expenses Deductible for Estate Tax (1)Amounts actually spent in the collection of assets, payment of debts, and distribution of property to persons entitled to it.(2)Executors' and trustees' commissions.(3)Attorneys' fees, including attorneys' fees in contesting a deficiency or prosecuting a claim for refund.5 more rows

These deductions may include mortgages and other debts, estate administration expenses, property that passes to surviving spouses and qualified charities.