Issue
Do legal costs incurred by the executor of a deceased estate, while acting as the executor of another family member's estate, form part of the cost base of the deceased estate's assets pursuant of subsection 110-25(6) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Decision
No. The legal cost were not incurred in relation to the assets of the deceased estate in question and therefore do not form part of the cost base under subsection 110-25(6) of the ITAA 1997. However, they may form part of the cost base of the assets of the other family member's estate.
Facts
The taxpayer is the executor of a deceased estate.
The taxpayer in their capacity for the late taxpayer's family also performed other duties, including acting as executor for the estates of other deceased family members.
Reasons for Decision
Although the taxpayer may have incurred this expenditure in their wide ranging duties performed for the deceased's family, this capital expenditure was not incurred in their capacity as the executor of the deceased estate in question. They were not incurred in establishing, preserving or defending their title to the assets devolved to that estate. However the expenditure may fall for consideration as part of the cost base of the assets of the estates of the other deceased family members before they were devolved to the taxpayer in their capacity as executor of this estate.
Accordingly, the taxpayer in their capacity as the executor of this estate, can not include this capital expenditure in the cost base of the estate's assets under the operation of subsection 110-25(6) of the ITAA 1997.