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    Deduction for Death Investigation Denied as “Hobby Loss”

    WealthManagement.com
    Oct 17, 2017

    Martin M. Shenkman 

    An estate is generally permitted a tax deduction for costs incurred with respect to
    the production or collection of income. However, the primary reason for having
    incurred those costs must have been to generate profit.

    In a recent case, the U.S. Court of Appeals for the Fifth Circuit affirmed the Tax
    Court’s holding that a taxpayer couldn’t deduct the costs of investigating his father’s
    death from his father’s estate because the investigation wasn’t motivated by profit
    (Vest v. Commissioner, (CA 5 June 2, 2017) 119 AFTR 2d par. 2017-813). But did the
    Internal Revenue Service have to label them a “hobby loss?”

    Read his commentary here.

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