AICPA weighs in on estate deduction proposed regulations

The American Institute of Certified Public Accountants (AICPA) has submitted comments on proposed regulations relating to the amount deductible from a decedent’s gross estate for claims against the estate under Internal Revenue Code (IRC) section 2053(a)(3). The proposed regulations will affect estates of decedents against whom there are claims outstanding at the time of their deaths.

The AICPA is concerned that the proposed regulations will not accomplish their goal of reducing costs for both the estate and the IRS in administering IRC section 2053. Instead, the organization has indicated that this approach would: (1) create a series of traps for unwary executors and tax preparers; and (2) lead to the equally inefficient situation where an estate must be held open for a number of years to determine the amount of the deduction for a contingent obligation.

"Heirs and executors need closure and would possibly incur many additional costs and burdens in filing annual refund claims every year for 25 or more years under certain circumstances. Additionally, the potential proliferation of petitions under IRC section 2204 certainly could increase the administrative burden for the government, as well," according to a statement issued by the AICPA.

You can read:

  • The proposed regulations,

  • The AICPA's letter to the IRS, and

  • The AICPA's comments on the estate deduction.