![]() (c) Attorney's fees-(1) Attorney's fees are deductible to the extent permitted by § 20.2053–1 and this section. (3) Except to the extent that a trustee is in fact performing services with respect to property subject to claims which would normally be performed by an executor, amounts paid as trustees' commissions do not constitute expenses of administration under the first category, and are only deductible as expenses of the second category to the extent provided in § 20.2053–8. If, however, the terms of the will set forth the compensation payable to the executor for services to be rendered in the administration of the estate, a deduction may be taken to the extent that the amount so fixed does not exceed the compensation allowable by the local law or practice and to the extent permitted by § 20.2053–1. (2) A bequest or devise to the executor in lieu of commissions is not deductible. In addition, the amount of the commissions claimed as a deduction must be in accordance with the usually accepted standards and practice of allowing such an amount in estates of similar size and character in the jurisdiction in which the estate is being administered, or any deviation from the usually accepted standards or range of amounts (permissible under applicable local law) must be justified to the satisfaction of the Commissioner. (1) Executors' commissions are deductible to the extent permitted by § 20.2053–1 and this section, but no deduction may be taken if no commissions are to be paid. Each of these classes is considered separately in paragraphs (b) through (d) of this section. Administration expenses include (1) executor's commissions (2) attorney's fees and (3) miscellaneous expenses. Expenditures not essential to the proper settlement of the estate, but incurred for the individual benefit of the heirs, legatees, or devisees, may not be taken as deductions. The expenses contemplated in the law are such only as attend the settlement of an estate and the transfer of the property of the estate to individual beneficiaries or to a trustee, whether the trustee is the executor or some other person. The amounts deductible from a decedent's gross estate as “administration expenses” of the first category (see paragraphs (a) and (c) of § 20.2053–1) are limited to such expenses as are actually and necessarily, incurred in the administration of the decedent's estate that is, in the collection of assets, payment of debts, and distribution of property to the persons entitled to it. Following the accrual method of accounting, expenses are recognized when they are incurred, not necessarily when they are paid.§ 20.2053-3 Deduction for expenses of administering estate. ![]() An accrued expense can be an estimate and differ from the supplier’s invoice that will arrive at a later date. Since accrued expenses represent a company's obligation to make future cash payments, they are shown on a company's balance sheet as current liabilities. ![]()
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