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June 27, 2022

IRS issues proposed regulations on deductibility of certain estate expenses

The IRS has issued proposed regulations (REG-130975-08) under IRC Section 2053 to provide guidance on the proper use of present-value principals in determining the amount an estate may deduct for funeral expenses, administration expenses and certain claims. The proposed regulations also provide guidance on the deductibility of (1) interest expense accruing on tax and penalties the estate owes; (2) interest expense accrued on certain loan obligations the estate incurs; and (3) amounts paid under a decedent's personal guarantee. Comments must be received by September 26, 2022; a public hearing is scheduled for October 12, 2022.