Allowable Expenses

• Estate tax return Form 706 is a lengthy tax return with many schedules that can attach to the return based on the estate assets, size of the estate and creditor's claims. In addition to executor expenses, attorney, accountant and miscellaneous expenses incurred in the administration of the state are allowable deductions.
  
  

Schedule J

• Most estates are subject to creditor's claims of the deceased person. Executor, attorney, accountant and miscellaneous estate expenses that result from administering an estate subject to creditor's claims are deducted on Schedule J of Form 706. The exact amount of the executor commission or fee appears in section B, line item 1 of Schedule J. The total amount of expenses on Schedule J also appears on the recapitulation section of Form 706 which is on page 3, line item 18 of the return.
  
  

Schedule L

• If the executor administers any portion of the estate that is not subject to the deceased person's creditor's claims, the fee or commission agreed upon for this service appears on Schedule L of Form 706. This type of executor fee is not common so there is no line item to enter an amount, since the accountant creates an entry to show the fee for non-creditor's claim services. Any amounts on Schedule L also appear on the recapitulation section of Form 706, which is located on page 3, line item 18 of the return.
  
  

Seek Advice

• Form 706 is a 40 page-document that is extremely cumbersome and time-consuming to complete. There are many rules and regulations regarding estate tax returns, and unless an executor has extensive expertise in preparation of estate tax returns he would be wise to hire an experience estate accountant to assume this duty for the estate.