Rules Finalized on Deductions for Claims Against Estates

For over 50 years, Bloomberg BNA’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...

IRS finalizes long-awaited rules (T.D. 9468) on determining the amount deductible from a deceased individual's gross estate for claims against the estate under tax code Section 2053(a)(3). The final regulations contain a general rule that a deduction for any claim or expense described in Section 2053 and the final rules is, with several exceptions, limited to “the amount actually paid in settlement or satisfaction of the claim or expense,” IRS says. Ronald Aucutt with McGuireWoods tells BNA that commenters who were unhappy with the entire fundamental approach of the proposed rules will probably remain so with the final regulations because they want the ability to keep deducting the estimated value of contingent claims.