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Are administrative expenses claimed on Form 706, eligible for deduction on Form 541?

January 04, 2017 • Josh Levy • Log In to Post Comments


In the most recent issue of the California Society of CPA's magazine, there is a Q&A with the FTB. One of the questions addresses administrative expenses claimed on form 706. For Federal tax purposes, you generally have a choice in claiming such expenses on form 706 or form 1041, but not both. Most of us thought the state required you to follow the Federal election. The FTB seems to indicate that you can claim the expenses on form 541 regardless of what is done for Federal purposes. Can you confirm if this is the case or not?

Here is the blurb from the CalCPA magazine: "As CA no longer has an estate tax, the question was raised whether admin expenses that were deducted on the Form 706 can be deducted on the Form 541. CA conforms to IRC Sec 67. As long as administrative expenses are deductible under IRC Sec 67 the admin expenses may be deducted on the Form 541 whether the expenses were deducted federally on Form 1041 or Form 706".

Any feedback on this would be greatly appreciated.

Thank you, 

Josh Levy 


Yes, FTB has stated that you can claim expenses on Form 541 if claimed on 706

While IRC section 642(g), to which California conforms, precludes at the federal level an estate claiming these expenses on both the estate tax return and income tax return, for state purposes there is no California estate tax.  As a result, the “anti-double-dipping rule” of IRC section 642(g) would not apply. Instead, under general R&TC section 17024.5 principles, which permit state elections to be different from federal elections, a taxpayer is entitled to claim these expenses on their California Form 541. 


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