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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11168
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hello, I have a question about my 691(c) deduction. My father

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Hello, I have a question about my 691(c) deduction. My father died in 2000 and we filed an estate tax return in 2001. I inherited an IRA from him and paid roughly half of its value in estate taxes. I want to make sure that I'm calculating the income in respect of deduction correctly. It's now the 12th year that I've been receiving a distribution based on my age. Am I entitled to keep taking this deduction?

Lane :

Hi,

Lane :

FIrst, are you the only recipient?

Lane :

We can probably simplify this, actually ... as ling as you have the taxable income, you have the deduction

Lane :

(sorry fot the typo) "... as LING as..."

Lane :

:) as LOOOONG as...

Lane :

THe deduction applied as LONG as you have taxable income (IRD)

Lane :


  • Divide the individual gross value of any IRD being included in a beneficiary’s gross income by the total gross value of all IRD being included in the gross estate of the decedent. IRD should not be reduced by corresponding DRD when making this calculation.

  • Multiply this fraction by the total federal estate tax deduction. The result will be the allocable federal estate tax deduction for each individual per year.

Lane :

not the the example above says "per year"

Lane :

The deduction is desiged to OFFSET the double taxation of Estate tax and income tax, conceptually, one can understand that as long as the income tax is there the deducton is there ... regardless of your choice of payout methods

Customer:

I want to make sure that I understand. I am the only recipient. Let's say that the value of the inherited IRA was $200,000 at the time that I inherited it. I paid $100,000 in estate taxes. I take out an average of $1,000 per year over the past 12 years.

Customer:

I understand the concept. My question is whether the original $100,000 in estate taxes is what you mean by the "federal estate tax deduction" or the 691(c) deduction.

Lane :

the 691 C deduction

Lane :

again, the deduction will always be there (as long as the income tax is there)

Customer:

The language that you copied and pasted said "federal estate tax deduction." Is that the $100,000 in estate taxes that I paid back in the year 2001?

Lane :

the formula tells the story ... it proportionate... if the income is taken in a lim

Lane :

sorry our posts crossed

Lane :

RIGHT

Lane :

exactly

Lane :

PER YEAR

Lane :

100 years or one year

Customer:

OK, this is good news. Thank you very much. You have answered my question.

Lane :

yes, that is the 100,000 you paid

Lane :

You're very welcome

Customer:

I have no further questions.

Lane :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

Lane :

THanks for using us

Lane :

Lane

Lane and other Tax Specialists are ready to help you
Thanks so much!

Again, once the deduction is establishes (relative to the estate taxes paid by the estate, it does not change

thanks again for the rating.

Lane