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charitable contribution of decedent

Zwiebach cpa
Level 1

Sister died and house was sold for 670000.  Sold immediatly after death.  No gain due to step up.

Her will stipulated that 67000 was to be a charitble donation to salvation army.

Remaining balance is inherited by beneficiary.  

Can my client, the executer and beneficiary  will write a check for $67,000

to salvation army in 2022.   Can he take a charitable contribution on his 2022 tax return?

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6 Comments 6
sjrcpa
Level 15

No. It is a specific bequest from the estate.


Ex-AllStar
qbteachmt
Level 15

Did he inherit the house and is writing his personal check and is not able to fulfill that bequest from the estate's resources? Or is the house considered part of the estate, which means the proceeds of the sale are the estate's, and he is in fact fulfilling that bequest from the estate?

In other words, what makes him thing he is donating his own funds?

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Drphibes
Level 7

If the house was sold in the Estate name and Federal ID number then he would have had to have an account such as a checking or savings account to receive the monies from the sale.  If he wrote a check out of that account for the $67,000, then the 1041 return would reflect the donation and all good.  If he distributed all the money to himself and there was no other money in the estate to make the contribution to the charity (which legally had 1st dibs on the proceeds) this could be interpreted as theft from the charity.

If he had transferred the house to his name and sold it, same problem as the charity had 1st dibs.

I am assuming the house sold in 2021.  If it were me, I would go and open up a checking account in the Estate's name and ID number and put back the $67,000+ a bit, write a check to the charity out of that account, wait for the check to clear, then close the account.  If there was no 1041 return filed for 2021, maybe open one with zeros, file a final one for 2022 with the contribution showing up in excess deductions upon termination maybe 😉

 

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PhoebeRoberts
Level 11
Level 11

There's no 1041-level charitable contribution deduction for specific bequests. You only get a 706-level deduction for them. See also https://www.thetaxadviser.com/issues/2021/mar/charitable-income-tax-deductions-trusts-estates.html

Drphibes
Level 7

I stand corrected.  Given other Sch A items such as state taxes, mortgage interest and such are allowed as excess deductions on termination, excess charity is not one of them.

Here is a clearer reference:

https://www.cpajournal.com/2017/09/15/greatest-hits-charitable-contributions/

a bit dated but the rules on this are the same.

Sorry guys, maybe I should be answering Q's on the board with a raging head cold 😉

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qbteachmt
Level 15

This really is the operative phrase: "Remaining balance is inherited by beneficiary."

The beneficiary is not a donor and the estate is not a donor.

"was to be a charitble donation to salvation army."

The Charity is a beneficiary.

If there is any legal question as to these relationships, that would be why you seek counsel from a local attorney.

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