Which of the following can be deducted either on the decedent's final 1040 income tax return or on the Form 706 Estate Tax return?

• A. Funeral expenses.
• B. Executor's administration expenses.
• C. Medical expenses relating to the decedent's last illness.
• D. Court costs in probating the estate.

Answer: (C)

Deductions for a decedent can come from either the final individual return or the estate tax return, depending on the type and timing of the expense. Medical expenses tied to the decedent’s last illness are flexible in this way: they can be claimed on the decedent’s final Form 1040 if they were paid in the year of death (or within a limited post-death period) and are subject to the usual medical-expense rules. They can also be deducted on the estate tax return (Form 706) to reduce the value of the estate. This dual-allowance is why medical expenses for the decedent’s last illness are the best answer for an item that can be deducted on either return.

Funeral expenses, executor’s administration expenses, and court costs in probating the estate are typically considered estate-related costs and are generally deducted only on Form 706, not on the decedent’s final Form 1040.