Which of the following is true of property taxes? (1) Property taxes are not ded

Question

Which of the following is true of property taxes? (1) Property taxes are not deductible by the trust or estate if imposed on personal property (2) Property taxes are deducted in computing the trust or estate's adjusted gross income (3) Property taxes may only be deducted on personal property if the tax is an ad valoreum tax that is, a tax based on the value of the property (4) Property taxes paid ofer the date of the decendent's death but accrued at the time may not be deducted on the Form 1041 unless the estate agrees not to deduct them on a Form 706

Explanation / Answer

1. Property taxes are not deductible by the trust or estate if imposed on personal property. False

2. Property taxes are deducted in computing the trust or estate's adjusted gross income. False-

Section 67 (e) provides an exception to the 2% floor when computing the adjusted gross income of a trust or estate

3. Property taxes may only be deducted on personal property if the tax is an ad valoreum tax that is tax based on the value of the property. TRUE -

There are 3 criterias to deduct personal property taxes:

a. The tax must be an ad valorem tax based on the value of the property. The personal property tax means an ad valorem tax which is imposed on an annual basis.

b. The tax must be imposed annually.

c. The tax must be imposed on personal property.

4. Property taxes paid offer the date of the decendent's death but accrued at the time may not be deducted on the form 1041 unless the estate agrees not to deduct them on a form 706. True

- An executor must file Form 706 for the estates of decendents who were the citizens at the time of death. For estate tax purposes, a resident is someone who had a domicile in the United States at the time of death. An executor must file Form 706 NA, for the estates of non resident decendents.

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