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Simple English definitions for legal terms
income in respect of a decedent
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A quick definition of income in respect of a decedent:
Income is the money or payment that someone receives from their job, business, investments, gifts, and other sources. There are different types of income, such as gross income (total income before deductions), net income (income after deductions), earned income (money earned from work), and unearned income (money earned from investments). Income in respect of a decedent is income that a person earned but did not collect before they died, and it is taxed to their estate or eventual recipient.A more thorough explanation:
Definition: Income in respect of a decedent refers to the income earned by a person but not collected before their death. This income is included in the decedent's gross estate for estate-tax purposes. For income-tax purposes, it is taxed to the estate or, if the estate does not collect the income, it is taxed to the eventual recipient.
Example: If a person earned money from work before their death but did not receive it, that money is considered income in respect of a decedent. For example, if a person earned $1,000 in November but did not receive the payment until January, after their death, that $1,000 is considered income in respect of a decedent. This income is taxed to the estate or the eventual recipient.
Explanation: Income in respect of a decedent is income that was earned by a person but not collected before their death. This income is taxed differently for estate-tax and income-tax purposes. For estate-tax purposes, it is included in the decedent's gross estate. For income-tax purposes, it is taxed to the estate or the eventual recipient. The example illustrates how income in respect of a decedent works in practice.