Executor fee paid to corporation?

[stbasil]

What is the name of your state? Texas

I am the executor of my father-in-law's estate (he lived in Mississippi). I am a one-man consulting company (internet and website stuff) set up as a Texas C corp. I was thinking about having the executor fee paid to my corporation rather than to me personally--I am using my company computers, printers, copier, software, office, etc., so it makes sense. Would that be a problem with the IRS? The will gives my name as the executor, not my corporation's name, of course.What is the name of your state?

[LdiJ]

Originally Posted by stbasil

What is the name of your state? Texas

I am the executor of my father-in-law's estate (he lived in Mississippi). I am a one-man consulting company (internet and website stuff) set up as a Texas C corp. I was thinking about having the executor fee paid to my corporation rather than to me personally--I am using my company computers, printers, copier, software, office, etc., so it makes sense. Would that be a problem with the IRS? The will gives my name as the executor, not my corporation's name, of course.What is the name of your state?

Its a problem, you were named as the executor, not your corporation. You and your corporation are separate legal entities.

However, why are you set up as a C-corp? You might want to get a consult with a tax pro about on that issue. It would be rare for it to be advantageous for a single shareholder corporation to be a C-corp rather than an S-corp.

[stbasil]

Yes, of course that could be a problem, that is why I pointed out the wording of the will. However, just because the corp and I are two individuals, the intent of the decedent as indicated in his will was for me to be the executor, even if I worked for a corporation. The fee would still be reported on a 1099 to the corp, and the corp would show it as consulting income in its filings, so nothing is being hidden. Is anyone aware of any case law that would indicate that this is a real problem with the IRS?

Regarding the form of my corp, the C Corp has served me well for over 10 years, and was chosen by my CPA, who has set up many such corporations for consultants. There are significant tax advantages, if you understand how to apply them.

[tranquility]

The executor's fee will be included in the final accounting and should be paid to the executor. If the corporation has been appointed as the executor then the payment should be made to the corp. If a person, to the person. That the person is an employee of some other entity is irrelevant. The person the court appointed as executor is what guides.

[stbasil]

Thanks to Ldij and Tranquility for your assistance!

[tranquility]

Taking advice different from what you wanted to hear and still pleasant? My goodness you'll be a good executor.

As a bonus, here's the scoop from Klienrock:

"An executor who assigns the fees to another recipient, rather than waiving the right to receive them, must include the fees in gross income. An executor who agrees to pay to a corporation his executor's fees in exchange for the services of the corporation relating to the estate, including the use of the corporation's facilities and employees, earns the fees and so is taxable on them. O'Connell v. Commissioner, T.C. Memo. 1980-432. The executor does not waive the fees; rather, he agrees to pay them over to the corporation in exchange for its services. He controls the disposition of the fees and receives the benefit of the fees, so he is taxable on the amount of the fees."