Income In Respect Of A Decedent Deduction

The character of the income in the hands of the beneficiary is the same as the character of the income would have been in the hands of the decedent.

Income in respect of a decedent deduction. It is an irs term that refers to inherited income that is subject to federal income. Income in respect to decedent includes the taxable portions of annuities traditional iras and tax deferred retirement plans series ee u s. Income in respect of a decedent ird is income earned by the decedent deceased person prior to his death but was payable or paid after his death. Savings bonds installment agreements partnership.

For example if the ird would have been subject to capital gains tax rates for the decedent then it is considered capital gains for the beneficiary. To understand the purpose of the irc section 691 c income tax deduction for income in respect of a decedent ird it s perhaps easiest to illustrate by looking at what would happen if the rules did not exist.