IRD and Practitioner Tips

AuthorSeymour Goldberg
ProfessionSenior partner in the law firm of Goldberg & Goldberg, P.C., Woodbury, New York
Pages131-132
131
IRD AND
PRACTITIONERTIPS
1. The personal representative of the estate should suggest to the
IRD recipients that the IRD recipients retain an attorney or
accountant (advisor) to determine the IRD items and the federal
estate tax attributable to these items. The attorney or accountant
for the estate should be considered as a possible candidate for this
special engagement.
2. The selected advisor should then send a letter to each potential
recipient of the IRD items that describes the IRD items that they
are entitled to and the formula that they must use in calculating
the IRD deductions.
3. The advisor should be retained to assist the IRD beneficiaries for
at least two years in calculating the IRD deductions.
4. The recipients of the IRD letter and formula should be told in
writing to retain permanent records regarding the IRD deduc-
tions taken by them on their tax returns and retain the advisor’s
correspondence.
5. It may take 20 years or more for the IRD deductions to be com-
pletely used up if the beneficiaries are young and only receive
required minimum distributions each year. Tracking the IRD
deductions is key.
6. If the beneficiary of the IRD items dies, then any unused IRD
deductions are available to heirs. Further, double IRD deductions
are possible. See IRS Letter Ruling 200316008, dated Decem-
ber 31, 2002.
7. The recipients of the IRD letter from the advisor should be told
in writing about the possibility of item 6. In addition, IRD deduc-
tions are available if a beneficiary has his / her own independent
IRD items when he / she dies. These points should be explained to
the recipients in the IRD letter.

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