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Income in Respect of a Decedent — How To Report: Taxes After a Death (2025 IRS Guide)

This guide covers “Income in Respect of a Decedent — How To Report” within taxes after a death. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 559 (2025), Survivors, Executors, and Administrators, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Income in Respect of a Decedent — How To Report

Income in respect of a decedent must be included in the income of one of the following.

  • The decedent's estate, if the estate receives it.

  • The beneficiary, if the right to income is passed directly to the beneficiary and the beneficiary receives it.

  • Any person to whom the estate properly distributes the right to receive it.

Tip:

If you have to include income in respect of a decedent in your gross income and an estate tax return (Form 706) was filed for the decedent, you may be able to claim a deduction for the estate tax paid on that income. See Estate Tax Deduction, later.

Example 1.

F. Johnson owned and operated an apple orchard and used the cash method of accounting. F. Johnson sold and delivered 1,000 bushels of apples to a canning factory for $2,000, but didn't receive payment before death. The proceeds from the sale are income in respect of a decedent. When the estate was settled, payment had not been made and the estate transferred the right to the payment to F. Johnson’s surviving spouse. When the surviving spouse collects the $2,000, that amount must be included in the surviving spouse’s return. It isn't reported on the final return of the decedent or on the return of the estate.

Example 2.

Assume the same facts as in Example 1, except that F. Johnson used the accrual method of accounting. The amount accrued from the sale of the apples would be included on F. Johnson’s final return. Neither the estate nor the surviving spouse would realize income in respect of a decedent when the money is later paid.

Example 3.

On February 1, G. High, a cash method taxpayer sold a tractor for $3,000, payable March 1 of the same year. G. High’s adjusted basis in the tractor was $2,000. G. High died on February 15, before receiving payment. The gain to be reported as income in respect of a decedent is the $1,000 difference between the decedent's basis in the property and the sale proceeds. In other words, the income in respect of a decedent is the gain the decedent would have realized had the decedent lived.

Example 4.

C. O’Neil was entitled to a large salary payment at the date of death. The amount was to be paid in five annual installments. The estate, after collecting two installments, distributed the right to the remaining installments to you, the beneficiary. The payments are income in respect of a decedent. None of the payments were includible on C. O’Neil’s final return. The estate must include in its income the two installments it received, and you must include in your income each of the three installments as you receive them.

Example 5.

Danny inherited the right to receive renewal commissions on life insurance sold by Danny’s parent, Taylor, before Taylor’s death. Danny inherited the right from Danny’s other parent, Charlie, who acquired it by bequest from Taylor. Charlie died before receiving all the commissions Charlie had the right to receive, so Danny received the rest. The commissions are income in respect of a decedent. None of these commissions were includible in Taylor’s final return. The commissions received by Charlie were included in Charlie’s income. The commissions Danny received aren't includible in Charlie’s income, even on Charlie’s final return. Danny must include them in Danny’s income.

Character of income.

The character of the income you receive in respect of a decedent remains the same as it would have been to the decedent if the decedent were alive. If the income would have been a capital gain to the decedent, it will be a capital gain to you.

Transfer of right to income.

If you transfer your right to income in respect of a decedent, you must include in your income the greater of:

  • The amount you receive for the right, or

  • The FMV of the right you transfer.

If you make a gift of such a right, you must include in your income the FMV of the right at the time of the gift.

If the right to income from an installment obligation is transferred, the amount you must include in income is reduced by the basis of the obligation. See Installment obligations, later.

Transfer defined.

A transfer for this purpose includes a sale, exchange, or other disposition, the satisfaction of an installment obligation at other than face value, or the cancellation of an installment obligation.

Installment obligations.

If the decedent sold property using the installment method and you are collecting payments on an installment obligation acquired from the decedent, use the same gross profit percentage the decedent used to figure the part of each payment that represents profit. Include in your income the same profit the decedent would have included had death not occurred. For more information, see Pub. 537, Installment Sales.

If you dispose of an installment obligation acquired from a decedent (other than by transfer to the obligor), the rules explained in Pub. 537 for figuring gain or loss on the disposition apply to you.

Transfer to obligor.

A transfer of a right to income, discussed earlier, has occurred if the decedent (seller) sold property using the installment method and the installment obligation was transferred to the obligor (buyer or person legally obligated to pay the installments). A transfer also occurs if the obligation was canceled either at death or by the estate or person receiving the obligation from the decedent. An obligation that becomes unenforceable is treated as having been canceled.

If such a transfer occurs, the amount included in the income of the transferor (the estate or beneficiary) is the greater of the amount received or the FMV of the installment obligation at the time of transfer, reduced by the basis of the obligation. The basis of the obligation is the decedent's basis, adjusted for all installment payments received after the decedent's death and before the transfer.

If the decedent and obligor were related persons, the FMV of the obligation can't be less than its face value.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.

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