The Gibson Estate is responsible for collecting outstanding income amounts and paying the remaining obligations of Juanita Gibson, the deceased. How does Federal income tax law treat these items? Hint: Define and use the term income in respect of a decedent in your answer.
What will be an ideal response?
Income in respect of a decedent (IRD) exists when a fiduciary or beneficiary receives an item that was earned but not recognized as gross income during the lifetime of the decedent. In general, IRD is treated in the following fashion:?
| ? | IRD is included in the gross estate and in the gross income of the ultimate recipient. |
| ? | There is no step-up or step-down of the basis of an IRD item. |
| ? | Expenses related to generating the IRD are deductible by the recipient and by the gross estate. |
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