Funeral Lunch Not Deductible

The decedent’s estate claimed an I.R.C. § 2053(a)(1) estate tax deduction for various funeral expenses including a $3,600 luncheon.

In Estate of Davenport v. Commissioner, T.C. Memo. 2006-215, the court upheld the IRS’s disallowance of this claim as follows:

Unfortunately, while we applaud the spirit of gratitude and generosity that apparently animated the decision to sponsor the funeral luncheon, the record before us is simply inadequate to establish the event’s deductibility. First, as a practical matter, both Michigan State law and the Federal regulations suggest a standard of reasonableness in examining the amount of funeral expenditures. Because the record here offers nothing but the total line-item figure of $3,638.92, we lack any basis whatsoever for determining reasonableness. We do not know whether that amount comprises charges for the venue, decorating, catering, entertainment, or a combination of supplies and services. We do not know who received the claimed payment or payments.

Second, the record is likewise insufficient to establish the requisite necessity in connection with decedent’s funeral. From the testimony at trial, it is to be inferred that the focus of the luncheon was on recognizing and thanking third parties for their support both during decedent’s life and after her passing.

That represents a shift from the traditional focus of a funeral in eulogizing and laying to rest the deceased. The evidence, consisting only of broad and generalized statements about the intent of the luncheon, deprives the Court of any ability to compare what may in fact have transpired there with activities typically associated with funeral services.

In addition, the testimony suggests that the reception was held at a different location than the funeral service itself * * *