IRD and Practitioner Tips

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, P.C., Woodbury, New York
• Pages: 131-132

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.