[Anonymous]

If you use cash basis, why include income if you haven’t collected it?

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Income in respect of a cash-basis decedent

a. Covers income earned and collected after a decedent’s death.

b. Receives a stepped-up basis in the decedent’s estate.

c. Includes a bonus earned before the taxpayer’s death but not collected until after death.

d. Must be included in the decedent’s fi nal income tax

return.

(c) The requirement is to determine the correct statement with regard to income in respect of a cash basis decedent. Income in respect of a decedent is income earned by a decedent before death that was not includible in the decedent’s final income tax return because of the decedent’s method of accounting (e.g., receivables of a cash basis decedent). Such income must be included in gross income by the person who receives it and has the same character (e.g., ordinary or capital) as it would have had if the decedent had lived.

[mla1169]

In case c the income has been collected, but subsequent to the decedents death. So it was not taxable income for the decedents final tax return (through date of death) but collected after that date and taxable to the beneficiary.

FAR- 77
AUD -49, 71, 84
REG -56,75!
BEC -75

Massachusetts CPA (non reporting) since 3/12.

[mla1169]

In case c the income has been collected, but subsequent to the decedents death. So it was not taxable income for the decedents final tax return (through date of death) but collected after that date and taxable to the beneficiary.

FAR- 77
AUD -49, 71, 84
REG -56,75!
BEC -75

Massachusetts CPA (non reporting) since 3/12.

[Author]

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