§691 — Recipients of income in respect of decedents
51 cases·14 followed·15 distinguished·1 criticized·2 overruled·19 cited—27% support
Statute Text — 26 U.S.C. §691
The amount of all items of gross income in respect of a decedent which are not properly includible in respect of the taxable period in which falls the date of his death or a prior period (including the amount of all items of gross income in respect of a prior decedent, if the right to receive such amount was acquired by reason of the death of the prior decedent or by bequest, devise, or inheritance from the prior decedent) shall be included in the gross income, for the taxable year when received, of:
the estate of the decedent, if the right to receive the amount is acquired by the decedent’s estate from the decedent;
the person who, by reason of the death of the decedent, acquires the right to receive the amount, if the right to receive the amount is not acquired by the decedent’s estate from the decedent; or
the person who acquires from the decedent the right to receive the amount by bequest, devise, or inheritance, if the amount is received after a distribution by the decedent’s estate of such right.
If a right, described in paragraph (1), to receive an amount is transferred by the estate of the decedent or a person who received such right by reason of the death of the decedent or by bequest, devise, or inheritance from the decedent, there shall be included in the gross income of the estate or such person, as the case may be, for the taxable period in which the transfer occurs, the fair market value of such right at the time of such transfer plus the amount by which any consideration for the transfer exceeds such fair market value. For purposes of this paragraph, the term “transfer” includes sale, exchange, or other disposition, or the satisfaction of an installment obligation at other than face value, but does not include transmission at death to the estate of the decedent or a transfer to a person pursuant to the right of such person to receive such amount by reason of the death of the decedent or by bequest, devise, or inheritance from the decedent.
The right, described in paragraph (1), to receive an amount shall be treated, in the hands of the estate of the decedent or any person who acquired such right by reason of the death of the decedent, or by bequest, devise, or inheritance from the decedent, as if it had been acquired by the estate or such person in the transaction in which the right to receive the income was originally derived and the amount includible in gross income under paragraph (1) or (2) shall be considered in the hands of the estate or such person to have the character which it would have had in the hands of the decedent if the decedent had lived and received such amount.
In the case of an installment obligation reportable by the decedent on the installment method under section 453, if such obligation is acquired by the decedent’s estate from the decedent or by any person by reason of the death of the decedent or by bequest, devise, or inheritance from the decedent—
an amount equal to the excess of the face amount of such obligation over the basis of the obligation in the hands of the decedent (determined under section 453B) shall, for the purpose of paragraph (1), be considered as an item of gross income in respect of the decedent; and
such obligation shall, for purposes of paragraphs (2) and (3), be considered a right to receive an item of gross income in respect of the decedent, but the amount includible in gross income under paragraph (2) shall be reduced by an amount equal to the basis of the obligation in the hands of the decedent (determined under section 453B).
In the case of an installment obligation reportable by the decedent on the installment method under section 453, for purposes of paragraph (2)—
the second sentence of paragraph (2) shall be applied by inserting “(other than the obligor)” after “or a transfer to a person”,
any cancellation of such an obligation shall be treated as a transfer, and
any cancellation of such an obligation occurring at the death of the decedent shall be treated as a transfer by the estate of the decedent (or, if held by a person other than the decedent before the death of the decedent, by such person).
In any case to which the first sentence of paragraph (2) applies by reason of subparagraph (A), if the decedent and the obligor were related persons (within the meaning of section 453(f)(1)), the fair market value of the installment obligation shall be treated as not less than its face amount.
For purposes of subparagraph (A), an installment obligation which becomes unenforceable shall be treated as if it were canceled.
The amount of any deduction specified in section 162, 163, 164, 212, or 611 (relating to deductions for expenses, interest, taxes, and depletion) or credit specified in section 27 (relating to foreign tax credit), in respect of a decedent which is not properly allowable to the decedent in respect of the taxable period in which falls the date of his death, or a prior period, shall be allowed:
In the case of a deduction specified in section 162, 163, 164, or 212 and a credit specified in section 27, in the taxable year when paid—
to the estate of the decedent; except that
if the estate of the decedent is not liable to discharge the obligation to which the deduction or credit relates, to the person who, by reason of the death of the decedent or by bequest, devise, or inheritance acquires, subject to such obligation, from the decedent an interest in property of the decedent.
In the case of the deduction specified in section 611, to the person described in subsection (a)(1)(A), (B), or (C) who, in the manner described therein, receives the income to which the deduction relates, in the taxable year when such income is received.
A person who includes an amount in gross income under subsection (a) shall be allowed, for the same taxable year, as a deduction an amount which bears the same ratio to the estate tax attributable to the net value for estate tax purposes of all the items described in subsection (a)(1) as the value for estate tax purposes of the items of gross income or portions thereof in respect of which such person included the amount in gross income (or the amount included in gross income, whichever is lower) bears to the value for estate tax purposes of all the items described in subsection (a)(1).
In the case of an estate or trust, the amount allowed as a deduction under subparagraph (A) shall be computed by excluding from the gross income of the estate or trust the portion (if any) of the items described in subsection (a)(1) which is properly paid, credited, or to be distributed to the beneficiaries during the taxable year.
For purposes of paragraph (1)—
The term “estate tax” means the tax imposed on the estate of the decedent or any prior decedent under section 2001 or 2101, reduced by the credits against such tax.
The net value for estate tax purposes of all the items described in subsection (a)(1) shall be the excess of the value for estate tax purposes of all the items described in subsection (a)(1) over the deductions from the gross estate in respect of claims which represent the deductions and credit described in subsection (b). Such net value shall be determined with respect to the provisions of section 421(c)(2), relating to the deduction for estate tax with respect to stock options to which part II of subchapter D applies.
The estate tax attributable to such net value shall be an amount equal to the excess of the estate tax over the estate tax computed without including in the gross estate such net value.
In the case of any tax imposed by chapter 13 on a taxable termination or a direct skip occurring as a result of the death of the transferor, there shall be allowed a deduction (under principles similar to the principles of this subsection) for the portion of such tax attributable to items of gross income of the trust which were not properly includible in the gross income of the trust for periods before the date of such termination.
For purposes of sections 1(h), 1202, and 1211, the amount taken into account with respect to any item described in subsection (a)(1) shall be reduced (but not below zero) by the amount of the deduction allowable under paragraph (1) of this subsection with respect to such item.
For purposes of computing the deduction under subsection (c)(1)(A), amounts received by a surviving annuitant—
as an annuity under a joint and survivor annuity contract where the decedent annuitant died after the annuity starting date (as defined in section 72(c)(4)), and
during the surviving annuitant’s life expectancy period,
shall, to the extent included in gross income under section 72, be considered as amounts included in gross income under subsection (a).
In determining the net value for estate tax purposes under subsection (c)(2)(B) for purposes of this subsection, the value for estate tax purposes of the items described in paragraph (1) of this subsection shall be computed—
by determining the excess of the value of the annuity at the date of the death of the deceased annuitant over the total amount excludable from the gross income of the surviving annuitant under section 72 during the surviving annuitant’s life expectancy period, and
by multiplying the figure so obtained by the ratio which the value of the annuity for estate tax purposes bears to the value of the annuity at the date of the death of the deceased.
For purposes of this subsection—
The term “life expectancy period” means the period beginning with the first day of the first period for which an amount is received by the surviving annuitant under the contract and ending with the close of the taxable year with or in which falls the termination of the life expectancy of the surviving annuitant. For purposes of this subparagraph, the life expectancy of the surviving annuitant shall be determined, as of the date of the death of the deceased annuitant, with reference to actuarial tables prescribed by the Secretary.
The surviving annuitant’s expected return under the contract shall be computed, as of the death of the deceased annuitant, with reference to actuarial tables prescribed by the Secretary.
For application of this section to income in respect of a deceased partner, see section 753.
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.691(f)-1 Cross reference
51 Citing Cases
Therefore, we hold that the $150,000 received by petitioner was not a death benefits payment and is not includable in petitioners’ gross income under section 691(a) as IRD.
The Estate's IRAs Should Not Be Entitled to Any Kind of Discount We find that all of the cases cited by the estate to be distinguishable from this case, and that the differences in our case justify a rejection of the estate's proposed discount of the IRAs. Further, we reject the estate's characterization of the tax liability that a beneficiary must pay upon distribution of the IRAs as a "cost" to make the underlying assets marketable. We agree with the Court of Appeals for the Fifth Circuit's re
We determined that the statutory scheme-in section 691 obviated the need to give the taxpayer any further relief.
62 of the payment was for decedent's CSB stock, and the remainder was for any claims for cases or work in process. 2. Whether the part of the payment which was made for any claims for cases or work in process is income in respect of a decedent under section 691. We hold that it is. Section references are to the Internal Revenue Code in effect for the year in issue. Rule references are to the Tax Court Rules of Practice and Procedure. At the request of CSB, which request neither party opposed, we
The $243,463 distribution was income in respect of a decedent pursuant to section 691 and was reported on the estate’s income tax return for its taxable period ending March 31, 2008.
“Section 691 promotes this principle by taxing property received after an individual’s death if the property would have been includable in gross income had the individual lived.” Kitch v. Commissioner, supra at 10. Section 691 provides that a taxpayer’s gross income includes IRD. See also sec. 61(a)(14). IRD consists of amounts: “(1) Of gross income
shall be included in the gross income, for the taxable year when received, of: .
53 at 37, it “addressed the treatment of an interest in a partnership that held unrealized receivables.” That “treatment” was an effect on tax “basis” under section 1014(c) of an inherited partnership interest as affected by section 691 (concerning “income in respect of decedents”).
The $243,463 distribution was income in respect ofa decedent pursuantto section 691 and was reported on the estate's income tax return for its taxable period ending March 31, 2008.
Inclusion in Gross Income.-- (1) General rule.--The amount of all items of gross income in respect of a decedent which are not properly includible in respect of the taxable period in which falls the date of his death or a prior period * * * shall be included in the gross income, for the taxable year when received, of: * * * * * * * (B) the person who, by reason of the death of the decedent, acquires the right to receive the amount, * * * Petitioner inherited the bonds when his mother died in 199
failure to establish that the expense was ordinary and necessary, and failure to establish that the expense qualifies as a miscellaneous other expense pursuant to the Internal Revenue Code (Code); (3) other miscellaneous deductions of $4,074.36 for section 691 expense deducted on Schedule A were disallowed for lack of substantiation and failure to establish that the expense qualifies as an other miscellaneous deduction pursuant to the Code; and (4) interest expense of $4,665.21 deducted on Sche
661 and 662 also do not govern situations in which those sections conflict with more specific Code sections in subchapter J, such as section 691, concerning income in respect of a decedent, Rollert Residuary Trust v.