deductions for decedents estate

[catax]

Decendents estate had no taxable income until year 2006. Had large legal and fiduciary expenses in 2003. Has income associated with those expenses in 2006 & 2007. Can these legal and fiduciary fees be considered accrued and deducted in 2006 against taxable income? Or do I have to file a return for each year and carry over as an NOL? Trying to finish today. Your help is appreciated. Thanks, Nena

[michaelmars]

i'd take the easy way out and put on 060 return at this point, net effect is the same

[catax]

I realize that the net effect is the same. I just hadn't come across this before and wanted to make sure that if I did it this way it would fly. Just don't want to have a large adjustment down the road. Just wanted some confirm that if I put it on '06 that it was a legitimate way to go. Nena

[Linda Mathey]

I know this is late, but my understanding is the proper way to handle it would be for the expenses to have been used when paid even if there was no income to offset. There is no NOL with a 1041 for those type of fees. They are just lost.

This is one reason that it is important to hold off paying those large legal and executor fees until the final year since then they can pass thru to the benes unless there is adequate income in the early years to absorb them.