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Irs Amendment

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Irs Amendment

Irs amendment Internal Revenue Bulletin:  2012-14  April 2, 2012  Rev. Irs amendment Proc. Irs amendment 2012-23 Table of Contents SECTION 1. Irs amendment PURPOSE SECTION 2. Irs amendment BACKGROUND SECTION 3. Irs amendment SCOPE SECTION 4. Irs amendment APPLICATION. Irs amendment 01 Limitations on Depreciation Deductions for Certain Automobiles. Irs amendment . Irs amendment 02 Inclusions in Income of Lessees of Passenger Automobiles. Irs amendment SECTION 5. Irs amendment EFFECTIVE DATE SECTION 6. Irs amendment DRAFTING INFORMATION SECTION 1. Irs amendment PURPOSE This revenue procedure provides: (1) limitations on depreciation deductions for owners of passenger automobiles first placed in service by the taxpayer during calendar year 2012, including separate tables of limitations on depreciation deductions for trucks and vans; and (2) the amounts that must be included in income by lessees of passenger automobiles first leased by the taxpayer during calendar year 2012, including a separate table of inclusion amounts for lessees of trucks and vans. Irs amendment The tables detailing these depreciation limitations and lessee inclusion amounts reflect the automobile price inflation adjustments required by § 280F(d)(7) of the Internal Revenue Code. Irs amendment SECTION 2. Irs amendment BACKGROUND . Irs amendment 01 For owners of passenger automobiles, § 280F(a) imposes dollar limitations on the depreciation deduction for the year the taxpayer places the passenger automobile in service and for each succeeding year. Irs amendment For passenger automobiles placed in service after 1988, § 280F(d)(7) requires the Internal Revenue Service to increase the amounts allowable as depreciation deductions by a price inflation adjustment amount. Irs amendment The method of calculating this price inflation amount for trucks and vans placed in service in or after calendar year 2003 uses a different CPI “automobile component” (the “new trucks” component) than that used in the price inflation amount calculation for other passenger automobiles (the “new cars” component), resulting in somewhat higher depreciation deductions for trucks and vans. Irs amendment This change reflects the higher rate of price inflation for trucks and vans since 1988. Irs amendment . Irs amendment 02 Section 401(a) of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, Pub. Irs amendment L. Irs amendment No. Irs amendment 111-312, 124 Stat. Irs amendment 3296 (Dec. Irs amendment 17, 2010) (the “Act”) extended the 50 percent additional first year depreciation deduction under § 168(k) to qualified property acquired by the taxpayer after December 31, 2007, and before January 1, 2013, if no written binding contract for the acquisition of the property existed before January 1, 2008, and if the taxpayer places the property in service generally before January 1, 2013. Irs amendment Section 168(k)(2)(F)(i) increases the first year depreciation allowed under § 280F(a)(1)(A)(i) by $8,000 for passenger automobiles to which the additional first year depreciation deduction under § 168(k) (hereinafter, referred to as “§ 168(k) additional first year depreciation deduction”) applies. Irs amendment . Irs amendment 03 Section 168(k)(2)(D)(i) provides that the § 168(k) additional first year depreciation deduction does not apply to any property required to be depreciated under the alternative depreciation system of § 168(g), including property described in § 280F(b)(1). Irs amendment Section 168(k)(2)(D)(iii) permits a taxpayer to elect out of the § 168(k) additional first year depreciation deduction for any class of property. Irs amendment Section 168(k)(4), as amended by the Act, permits a corporation to elect to increase the alternative minimum tax (“AMT”) credit limitation under § 53(c), instead of claiming the § 168(k) additional first year depreciation deduction for all eligible qualified property placed in service after December 31, 2010, that is round 2 extension property (as defined in § 168(k)(4)(I)(iv)). Irs amendment Accordingly, this revenue procedure provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction applies. Irs amendment This revenue procedure also provides tables for passenger automobiles for which the § 168(k) additional first year depreciation deduction does not apply, either because taxpayer (1) purchased the passenger automobile used; (2) did not use the passenger automobile during 2012 more than 50 percent for business purposes; (3) elected out of the § 168(k) additional first year depreciation deduction pursuant to § 168(k)(2)(D)(iii); or (4) elected to increase the § 53 AMT credit limitation in lieu of claiming § 168(k) additional first year depreciation. Irs amendment . Irs amendment 04 Section 280F(c) requires a reduction in the deduction allowed to the lessee of a leased passenger automobile. Irs amendment The reduction must be substantially equivalent to the limitations on the depreciation deductions imposed on owners of passenger automobiles. Irs amendment Under § 1. Irs amendment 280F-7(a) of the Income Tax Regulations, this reduction requires a lessee to include in gross income an amount determined by applying a formula to the amount obtained from a table. Irs amendment One table applies to lessees of trucks and vans and another table applies to all other passenger automobiles. Irs amendment Each table shows inclusion amounts for a range of fair market values for each taxable year after the passenger automobile is first leased. Irs amendment SECTION 3. Irs amendment SCOPE . Irs amendment 01 The limitations on depreciation deductions in section 4. Irs amendment 01(2) of this revenue procedure apply to passenger automobiles (other than leased passenger automobiles) that are placed in service by the taxpayer in calendar year 2012, and continue to apply for each taxable year that the passenger automobile remains in service. Irs amendment . Irs amendment 02 The tables in section 4. Irs amendment 02 of this revenue procedure apply to leased passenger automobiles for which the lease term begins during calendar year 2012. Irs amendment Lessees of these passenger automobiles must use these tables to determine the inclusion amount for each taxable year during which the passenger automobile is leased. Irs amendment See Rev. Irs amendment Proc. Irs amendment 2007-30, 2007-1 C. Irs amendment B. Irs amendment 1104, for passenger automobiles first leased during calendar year 2007; Rev. Irs amendment Proc. Irs amendment 2008-22, 2008-1 C. Irs amendment B. Irs amendment 658, for passenger automobiles first leased during calendar year 2008; Rev. Irs amendment Proc. Irs amendment 2009-24, 2009-17 I. Irs amendment R. Irs amendment B. Irs amendment 885, for passenger automobiles first leased during calendar year 2009; Rev. Irs amendment Proc. Irs amendment 2010-18, 2010-9 I. Irs amendment R. Irs amendment B. Irs amendment 427, as amplified and modified by section 4. Irs amendment 03 of Rev. Irs amendment Proc. Irs amendment 2011-21, 2011-12 I. Irs amendment R. Irs amendment B. Irs amendment 560, for passenger automobiles first leased during calendar year 2010; and Rev. Irs amendment Proc. Irs amendment 2011-21, for passenger automobiles first leased during calendar year 2011. Irs amendment SECTION 4. Irs amendment APPLICATION . Irs amendment 01 Limitations on Depreciation Deductions for Certain Automobiles. Irs amendment (1) Amount of the inflation adjustment. Irs amendment (a) Passenger automobiles (other than trucks or vans). Irs amendment Under § 280F(d)(7)(B)(i), the automobile price inflation adjustment for any calendar year is the percentage (if any) by which the CPI automobile component for October of the preceding calendar year exceeds the CPI automobile component for October 1987. Irs amendment Section 280F(d)(7)(B)(ii) defines the term “CPI automobile component” as the automobile component of the Consumer Price Index for all Urban Consumers published by the Department of Labor. Irs amendment The new car component of the CPI was 115. Irs amendment 2 for October 1987 and 143. Irs amendment 419 for October 2011. Irs amendment The October 2011 index exceeded the October 1987 index by 28. Irs amendment 219. Irs amendment Therefore, the automobile price inflation adjustment for 2012 for passenger automobiles (other than trucks and vans) is 24. Irs amendment 5 percent (28. Irs amendment 219/115. Irs amendment 2 x 100%). Irs amendment The dollar limitations in § 280F(a) are multiplied by a factor of 0. Irs amendment 245, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations applicable to passenger automobiles (other than trucks and vans) for calendar year 2012. Irs amendment This adjustment applies to all passenger automobiles (other than trucks and vans) that are first placed in service in calendar year 2012. Irs amendment (b) Trucks and vans. Irs amendment To determine the dollar limitations for trucks and vans first placed in service during calendar year 2012, the Service uses the new truck component of the CPI instead of the new car component. Irs amendment The new truck component of the CPI was 112. Irs amendment 4 for October 1987 and 146. Irs amendment 607 for October 2011. Irs amendment The October 2011 index exceeded the October 1987 index by 34. Irs amendment 207. Irs amendment Therefore, the automobile price inflation adjustment for 2012 for trucks and vans is 30. Irs amendment 43 percent (34. Irs amendment 207/112. Irs amendment 4 x 100%). Irs amendment The dollar limitations in § 280F(a) are multiplied by a factor of 0. Irs amendment 3043, and the resulting increases, after rounding to the nearest $100, are added to the 1988 limitations to give the depreciation limitations for trucks and vans. Irs amendment This adjustment applies to all trucks and vans that are first placed in service in calendar year 2012. Irs amendment (2) Amount of the limitation. Irs amendment Tables 1 through 4 contain the dollar amount of the depreciation limitation for each taxable year for passenger automobiles a taxpayer places in service in calendar year 2012. Irs amendment Use Table 1 for a passenger automobile (other than a truck or van), and Table 2 for a truck or van, placed in service in calendar year 2012 for which the § 168(k) additional first year depreciation deduction applies. Irs amendment Use Table 3 for a passenger automobile (other than a truck or van), and Table 4 for a truck or van, placed in service in calendar year 2012 for which the § 168(k) additional first year depreciation deduction does not apply. Irs amendment REV. Irs amendment PROC. Irs amendment 2012-23 TABLE 1 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. Irs amendment PROC. Irs amendment 2012-23 TABLE 2 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION APPLIES Tax Year Amount 1st Tax Year $11,360 2nd Tax Year $5,300 3rd Tax Year $3,150 Each Succeeding Year $1,875 REV. Irs amendment PROC. Irs amendment 2012-23 TABLE 3 DEPRECIATION LIMITATIONS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,160 2nd Tax Year $5,100 3rd Tax Year $3,050 Each Succeeding Year $1,875 REV. Irs amendment PROC. Irs amendment 2012-23 TABLE 4 DEPRECIATION LIMITATIONS FOR TRUCKS AND VANS PLACED IN SERVICE IN CALENDAR YEAR 2012 FOR WHICH THE § 168(k) ADDITIONAL FIRST YEAR DEPRECIATION DEDUCTION DOES NOT APPLY Tax Year Amount 1st Tax Year $3,360 2nd Tax Year $5,300 3rd Tax Year $3,150 Each Succeeding Year $1,875 . Irs amendment 02 Inclusions in Income of Lessees of Passenger Automobiles. Irs amendment A taxpayer must follow the procedures in § 1. Irs amendment 280F-7(a) for determining the inclusion amounts for passenger automobiles first leased in calendar year 2012. Irs amendment In applying these procedures, lessees of passenger automobiles other than trucks and vans should use Table 5 of this revenue procedure, while lessees of trucks and vans should use Table 6 of this revenue procedure. Irs amendment REV. Irs amendment PROC. Irs amendment 2012-23 TABLE 5 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES (THAT ARE NOT TRUCKS OR VANS) WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2012 Fair Market Value of Passenger Automobile Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $18,500 $19,000 2 4 5 6 8 19,000 19,500 2 4 7 7 9 19,500 20,000 2 5 8 8 10 20,000 20,500 3 5 9 10 11 20,500 21,000 3 6 9 12 12 21,000 21,500 3 7 10 12 14 21,500 22,000 3 8 11 13 16 22,000 23,000 4 8 13 15 17 23,000 24,000 4 10 15 17 20 24,000 25,000 5 11 17 19 23 25,000 26,000 6 12 19 21 26 26,000 27,000 6 14 20 24 28 27,000 28,000 7 15 22 26 31 28,000 29,000 7 16 25 28 33 29,000 30,000 8 18 25 32 35 30,000 31,000 9 19 27 34 38 31,000 32,000 9 20 30 36 41 32,000 33,000 10 21 32 38 43 33,000 34,000 10 23 33 41 46 34,000 35,000 11 24 35 43 49 35,000 36,000 12 25 37 45 52 36,000 37,000 12 27 39 47 54 37,000 38,000 13 28 41 49 57 38,000 39,000 13 29 43 52 59 39,000 40,000 14 30 45 54 62 40,000 41,000 14 32 47 56 65 41,000 42,000 15 33 49 58 68 42,000 43,000 16 34 51 61 70 43,000 44,000 16 36 52 63 73 44,000 45,000 17 37 54 66 75 45,000 46,000 17 38 57 67 78 46,000 47,000 18 39 59 70 80 47,000 48,000 19 40 61 72 83 48,000 49,000 19 42 62 75 86 49,000 50,000 20 43 64 77 89 50,000 51,000 20 45 66 79 91 51,000 52,000 21 46 68 81 94 52,000 53,000 21 47 70 84 96 53,000 54,000 22 48 72 86 99 54,000 55,000 23 49 74 88 102 55,000 56,000 23 51 76 90 104 56,000 57,000 24 52 78 92 107 57,000 58,000 24 54 79 95 110 58,000 59,000 25 55 81 97 113 59,000 60,000 26 56 83 100 115 60,000 62,000 26 58 86 103 119 62,000 64,000 28 60 90 108 124 64,000 66,000 29 63 94 112 129 66,000 68,000 30 66 97 117 135 68,000 70,000 31 68 102 121 140 70,000 72,000 32 71 105 126 145 72,000 74,000 33 74 109 130 151 74,000 76,000 35 76 113 135 156 76,000 78,000 36 78 117 140 161 78,000 80,000 37 81 120 145 166 80,000 85,000 39 86 127 152 176 85,000 90,000 42 92 137 163 189 90,000 95,000 45 98 147 175 202 95,000 100,000 48 105 155 187 215 100,000 110,000 52 115 170 203 235 110,000 120,000 58 127 189 227 262 120,000 130,000 64 140 208 250 288 130,000 140,000 70 153 227 272 315 140,000 150,000 75 166 246 296 340 150,000 160,000 81 179 265 318 368 160,000 170,000 87 192 284 341 394 170,000 180,000 93 204 304 364 420 180,000 190,000 99 217 323 387 446 190,000 200,000 105 230 342 409 473 200,000 210,000 111 243 361 432 499 210,000 220,000 116 256 380 455 526 220,000 230,000 122 269 399 478 552 230,000 240,000 128 282 418 501 578 240,000 and up 134 294 437 524 605 REV. Irs amendment PROC. Irs amendment 2012-23 TABLE 6 DOLLAR AMOUNTS FOR TRUCKS AND VANS WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2012 Fair Market Value of Truck or Van Tax Year During Lease Over Not Over 1st 2nd 3rd 4th 5th & Later $19,000 $19,500 1 4 5 6 7 19,500 20,000 2 4 6 7 9 20,000 20,500 2 5 7 8 10 20,500 21,000 2 5 8 10 11 21,000 21,500 3 6 9 10 13 21,500 22,000 3 6 10 12 14 22,000 23,000 3 8 11 14 15 23,000 24,000 4 9 13 16 18 24,000 25,000 4 10 15 19 21 25,000 26,000 5 11 17 21 24 26,000 27,000 6 12 19 23 26 27,000 28,000 6 14 21 25 29 28,000 29,000 7 15 23 27 32 29,000 30,000 7 17 24 30 34 30,000 31,000 8 18 26 32 37 31,000 32,000 9 19 28 34 40 32,000 33,000 9 20 31 36 42 33,000 34,000 10 21 33 39 44 34,000 35,000 10 23 34 41 48 35,000 36,000 11 24 36 44 50 36,000 37,000 12 25 38 46 53 37,000 38,000 12 27 40 48 55 38,000 39,000 13 28 42 50 58 39,000 40,000 13 29 44 53 60 40,000 41,000 14 31 45 55 63 41,000 42,000 14 32 48 57 66 42,000 43,000 15 33 50 59 69 43,000 44,000 16 34 52 61 72 44,000 45,000 16 36 53 64 74 45,000 46,000 17 37 55 66 77 46,000 47,000 17 38 58 68 79 47,000 48,000 18 40 59 70 82 48,000 49,000 19 41 61 73 84 49,000 50,000 19 42 63 75 87 50,000 51,000 20 43 65 78 89 51,000 52,000 20 45 66 80 93 52,000 53,000 21 46 68 83 95 53,000 54,000 21 48 70 84 98 54,000 55,000 22 49 72 87 100 55,000 56,000 23 50 74 89 103 56,000 57,000 23 51 76 92 105 57,000 58,000 24 52 78 94 108 58,000 59,000 24 54 80 96 111 59,000 60,000 25 55 82 98 114 60,000 62,000 26 57 85 101 118 62,000 64,000 27 60 88 106 123 64,000 66,000 28 62 93 110 128 66,000 68,000 29 65 96 115 134 68,000 70,000 30 67 100 120 139 70,000 72,000 32 70 103 125 144 72,000 74,000 33 72 108 129 149 74,000 76,000 34 75 111 134 155 76,000 78,000 35 78 115 138 160 78,000 80,000 36 80 119 143 165 80,000 85,000 38 85 125 151 175 85,000 90,000 41 91 135 163 187 90,000 95,000 44 98 144 174 201 95,000 100,000 47 104 154 185 214 100,000 110,000 52 113 169 202 234 110,000 120,000 57 127 187 225 261 120,000 130,000 63 139 207 248 287 130,000 140,000 69 152 226 271 313 140,000 150,000 75 165 245 294 339 150,000 160,000 81 178 264 316 366 160,000 170,000 87 190 283 340 392 170,000 180,000 92 204 302 362 419 180,000 190,000 98 216 322 385 445 190,000 200,000 104 229 340 409 471 200,000 210,000 110 242 359 431 498 210,000 220,000 116 255 378 454 524 220,000 230,000 122 267 398 477 551 230,000 240,000 127 281 416 500 577 240,000 and up 133 294 435 523 603 SECTION 5. Irs amendment EFFECTIVE DATE This revenue procedure applies to passenger automobiles that a taxpayer first places in service or first leases during calendar year 2012. Irs amendment SECTION 6. Irs amendment DRAFTING INFORMATION The principal author of this revenue procedure is Bernard P. Irs amendment Harvey of the Office of Associate Chief Counsel (Income Tax & Accounting). Irs amendment For further information regarding this revenue procedure, contact Mr. Irs amendment Harvey at (202) 622-4930 (not a toll-free call). Irs amendment Prev  Up  Next   Home   More Internal Revenue Bulletins
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The Irs Amendment

Irs amendment Publication 559 - Main Content Table of Contents Personal RepresentativeDuties Fees Received by Personal Representatives Final Income Tax Return for Decedent—Form 1040Name, Address, and Signature When and Where To File Filing Requirements Income To Include Exemptions and Deductions Credits, Other Taxes, and Payments Tax Forgiveness for Armed Forces Members, Victims of Terrorism, and Astronauts Filing Reminders Other Tax InformationTax Benefits for Survivors Income in Respect of a Decedent Deductions in Respect of a Decedent Estate Tax Deduction Gifts, Insurance, and Inheritances Other Items of Income Income Tax Return of an Estate— Form 1041Filing Requirements Income To Include Exemption and Deductions Credits, Tax, and Payments Name, Address, and Signature When and Where To File Distributions to BeneficiariesIncome That Must Be Distributed Currently Other Amounts Distributed Discharge of a Legal Obligation Character of Distributions How and When To Report Bequest Termination of Estate Estate and Gift TaxesApplicable Credit Amount Gift Tax Estate Tax Generation-Skipping Transfer Tax Comprehensive ExampleFinal Return for Decedent—Form 1040 Income Tax Return of an Estate—Form 1041 How To Get Tax HelpLow Income Taxpayer Clinics Personal Representative A personal representative of an estate is an executor, administrator, or anyone who is in charge of the decedent's property. Irs amendment Generally, an executor (or executrix) is named in a decedent's will to administer the estate and distribute properties as the decedent has directed. Irs amendment An administrator (or administratrix) is usually appointed by the court if no will exists, if no executor was named in the will, or if the named executor cannot or will not serve. Irs amendment In general, an executor and an administrator perform the same duties and have the same responsibilities. Irs amendment For estate tax purposes, if there is no executor or administrator appointed, qualified, and acting within the United States, the term “executor” includes anyone in actual or constructive possession of any property of the decedent. Irs amendment It includes, among others, the decedent's agents and representatives; safe-deposit companies, warehouse companies, and other custodians of property in this country; brokers holding securities of the decedent as collateral; and the debtors of the decedent who are in this country. Irs amendment Duties The primary duties of a personal representative are to collect all the decedent's assets, pay his or her creditors, and distribute the remaining assets to the heirs or other beneficiaries. Irs amendment The personal representative also must perform the following duties. Irs amendment Apply for an employer identification number (EIN) for the estate. Irs amendment File all tax returns, including income, estate and gift tax returns, when due. Irs amendment Pay the tax determined up to the date of discharge from duties. Irs amendment Other duties of the personal representative in federal tax matters are discussed in other sections of this publication. Irs amendment If any beneficiary is a nonresident alien, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for information on the personal representative's duties as a withholding agent. Irs amendment Penalty. Irs amendment   There is a penalty for failure to file a tax return when due unless the failure is due to reasonable cause. Irs amendment Reliance on an agent (attorney, accountant, etc. Irs amendment ) is not reasonable cause for late filing. Irs amendment It is the personal representative's duty to file the returns for the decedent and the estate when due. Irs amendment Identification number. Irs amendment   The first action you should take if you are the personal representative for the decedent is to apply for an EIN for the estate. Irs amendment You should apply for this number as soon as possible because you need to enter it on returns, statements, and other documents you file concerning the estate. Irs amendment You also must give the number to payers of interest and dividends and other payers who must file a return concerning the estate. Irs amendment   You can get an EIN by applying online at www. Irs amendment irs. Irs amendment gov (click on "Apply for an EIN Online" under the Tools heading). Irs amendment Generally, if you apply online, you will receive your EIN immediately upon completing the application. Irs amendment You can also apply using Form SS-4, Application for Employer Identification Number. Irs amendment Generally, if you apply by mail, it takes about 4 weeks to get your EIN. Irs amendment See the form instructions for other ways to apply. Irs amendment   Payers of interest and dividends report amounts on Forms 1099 using the identification number of the person to whom the account is payable. Irs amendment After a decedent's death, Forms 1099 must reflect the identification number of the estate or beneficiary to whom the amounts are payable. Irs amendment As the personal representative handling the estate, you must furnish this identification number to the payer. Irs amendment For example, if interest is payable to the estate, the estate's EIN must be provided to the payer and used to report the interest on Form 1099-INT, Interest Income. Irs amendment If the interest is payable to a surviving joint owner, the survivor's identification number, such as an SSN or ITIN, must be provided to the payer and used to report the interest. Irs amendment   If the estate or a survivor may receive interest or dividends after you inform the payer of the decedent's death, the payer should give you (or the survivor) a Form W-9, Request for Taxpayer Identification Number and Certification (or a similar substitute form). Irs amendment Complete this form to inform the payer of the estate's (or if completed by the survivor, the survivor's) identification number and return it to the payer. Irs amendment    Do not use the deceased individual's identifying number to file an individual income tax return after the decedent's final tax return. Irs amendment Also do not use it to make estimated tax payments for a tax year after the year of death. Irs amendment Penalty. Irs amendment   If you do not include the EIN or the taxpayer identification number of another person where it is required on a return, statement, or other document, you are liable for a penalty for each failure, unless you can show reasonable cause. Irs amendment You also are liable for a penalty if you do not give the taxpayer identification number of another person when required on a return, statement, or other document. Irs amendment Notice of fiduciary relationship. Irs amendment   The term fiduciary means any person acting for another person. Irs amendment It applies to persons who have positions of trust on behalf of others. Irs amendment A personal representative for a decedent's estate is a fiduciary. Irs amendment Form 56. Irs amendment   If you are appointed to act in a fiduciary capacity for another, you must file a written notice with the IRS stating this. Irs amendment Form 56, Notice Concerning Fiduciary Relationship, is used for this purpose. Irs amendment See the Instructions for Form 56 for filing requirements and other information. Irs amendment   File Form 56 as soon as all the necessary information (including the EIN) is available. Irs amendment It notifies the IRS that you, as the fiduciary, are assuming the powers, rights, duties, and privileges of the decedent. Irs amendment The notice remains in effect until you notify the IRS (by filing another Form 56) that your fiduciary relationship with the estate has terminated. Irs amendment Termination of fiduciary relationship. Irs amendment   Form 56 should also be filed to notify the IRS if your fiduciary relationship is terminated or when a successor fiduciary is appointed if the estate has not been terminated. Irs amendment See Form 56 and its instructions for more information. Irs amendment   At the time of termination of the fiduciary relationship, you may want to file Form 4810, Request for Prompt Assessment Under Internal Revenue Code Section 6501(d), and Form 5495, Request for Discharge From Personal Liability Under Internal Revenue Code Section 2204 or 6905, to wind up your duties as fiduciary. Irs amendment See below for a discussion of these forms. Irs amendment Request for prompt assessment (charge) of tax. Irs amendment   The IRS ordinarily has 3 years from the date an income tax return is filed, or its due date, whichever is later, to charge any additional tax due. Irs amendment However, as a personal representative, you may request a prompt assessment of tax after the return has been filed. Irs amendment This reduces the time for making the assessment to 18 months from the date the written request for prompt assessment was received. Irs amendment This request can be made for any tax return (except the estate tax return) of the decedent or the decedent's estate. Irs amendment This may permit a quicker settlement of the tax liability of the estate and an earlier final distribution of the assets to the beneficiaries. Irs amendment Form 4810. Irs amendment   Form 4810 can be used for making this request. Irs amendment It must be filed separately from any other document. Irs amendment   As the personal representative for the decedent's estate, you are responsible for any additional taxes that may be due. Irs amendment You can request prompt assessment of any of the decedent's taxes (other than federal estate taxes) for any years for which the statutory period for assessment is open. Irs amendment This applies even though the returns were filed before the decedent's death. Irs amendment Failure to report income. Irs amendment   If you or the decedent failed to report substantial amounts of gross income (more than 25% of the gross income reported on the return) or filed a false or fraudulent return, your request for prompt assessment will not shorten the period during which the IRS may assess the additional tax. Irs amendment However, such a request may relieve you of personal liability for the tax if you did not have knowledge of the unpaid tax. Irs amendment Request for discharge from personal liability for tax. Irs amendment   An executor can make a request for discharge from personal liability for a decedent's income, gift, and estate taxes. Irs amendment The request must be made after the returns for those taxes are filed. Irs amendment To make the request, file Form 5495. Irs amendment For this purpose, an executor is an executor or administrator that is appointed, qualified, and acting within the United States. Irs amendment   Within 9 months after receipt of the request, the IRS will notify the executor of the amount of taxes due. Irs amendment If this amount is paid, the executor will be discharged from personal liability for any future deficiencies. Irs amendment If the IRS has not notified the executor, he or she will be discharged from personal liability at the end of the 9-month period. Irs amendment    Even if the executor is discharged from personal liability, the IRS will still be able to assess tax deficiencies against the executor to the extent he or she still has any of the decedent's property. Irs amendment Insolvent estate. Irs amendment   Generally, if a decedent's estate is insufficient to pay all the decedent's debts, the debts due to the United States must be paid first. Irs amendment Both the decedent's federal income tax liabilities at the time of death and the estate's income tax liability are debts due to the United States. Irs amendment The personal representative of an insolvent estate is personally responsible for any tax liability of the decedent or of the estate if he or she had notice of such tax obligations or failed to exercise due care in determining if such obligations existed before distribution of the estate's assets and before being discharged from duties. Irs amendment The extent of such personal responsibility is the amount of any other payments made before paying the debts due to the United States, except where such other debt paid has priority over the debts due to the United States. Irs amendment Income tax liabilities need not be formally assessed for the personal representative to be liable if he or she was aware or should have been aware of their existence. Irs amendment Fees Received by Personal Representatives All personal representatives must include fees paid to them from an estate in their gross income. Irs amendment If you are not in the trade or business of being an executor (for instance, you are the executor of a friend's or relative's estate), report these fees on your Form 1040, line 21. Irs amendment If you are in the trade or business of being an executor, report fees received from the estate as self-employment income on Schedule C or Schedule C-EZ of your Form 1040. Irs amendment If the estate operates a trade or business and you, as executor, actively participate in the trade or business while fulfilling your duties, any fees you receive related to the operation of the trade or business must be reported as self-employment income on Schedule C (or Schedule C-EZ) of your Form 1040. Irs amendment Final Income Tax Return for Decedent—Form 1040 The personal representative (defined earlier) must file the final income tax return (Form 1040) of the decedent for the year of death and any returns not filed for preceding years. Irs amendment A surviving spouse, under certain circumstances, may have to file the returns for the decedent. Irs amendment See Joint Return, later. Irs amendment Return for preceding year. Irs amendment   If an individual died after the close of the tax year, but before the return for that year was filed, the return for the year just closed will not be the final return. Irs amendment The return for that year will be a regular return and the personal representative must file it. Irs amendment Example. Irs amendment Samantha Smith died on March 21, 2013, before filing her 2012 tax return. Irs amendment Her personal representative must file her 2012 return by April 15, 2013. Irs amendment Her final tax return covering the period from January 1, 2013, to March 20, 2013, is due April 15, 2014. Irs amendment Name, Address, and Signature Write the word “DECEASED,” the decedent's name, and the date of death across the top of the tax return. Irs amendment If filing a joint return, write the name and address of the decedent and the surviving spouse in the name and address fields. Irs amendment If a joint return is not being filed, write the decedent's name in the name field and the personal representative's name and address in the address field. Irs amendment Third party designee. Irs amendment   You can check the “Yes” box in the Third Party Designee area on page 2 of the return to authorize the IRS to discuss the return with a friend, family member, or any other person you choose. Irs amendment This allows the IRS to call the person you identified as the designee to answer any questions that may arise during the processing of the return. Irs amendment It also allows the designee to perform certain actions. Irs amendment See the Instructions for Form 1040 for details. Irs amendment Signature. Irs amendment   If a personal representative has been appointed, that person must sign the return. Irs amendment If it is a joint return, the surviving spouse must also sign it. Irs amendment If no personal representative has been appointed, the surviving spouse (on a joint return) signs the return and writes in the signature area “Filing as surviving spouse. Irs amendment ” If no personal representative has been appointed and if there is no surviving spouse, the person in charge of the decedent's property must file and sign the return as “personal representative. Irs amendment ” Paid preparer. Irs amendment   If you pay someone to prepare, assist in preparing, or review the tax return, that person must sign the return and fill in the other blanks in the Paid Preparer Use Only area of the return. Irs amendment See the Form 1040 instructions for details. Irs amendment When and Where To File The final income tax return is due at the same time the decedent's return would have been due had death not occurred. Irs amendment A final return for a decedent who was a calendar year taxpayer is generally due on April 15 following the year of death, regardless of when during that year death occurred. Irs amendment However, when the due date falls on a Saturday, Sunday, or legal holiday, the return is filed timely if filed by the next business day. Irs amendment The tax return must be prepared for the year of death regardless of when during the year death occurred. Irs amendment Generally, you must file the final income tax return of the decedent with the Internal Revenue Service Center for the place where you live. Irs amendment A tax return for a decedent can be electronically filed. Irs amendment A personal representative may also obtain an income tax filing extension on behalf of a decedent. Irs amendment Filing Requirements The gross income, age, and filing status of a decedent generally determine whether a return must be filed. Irs amendment Gross income is all income received by an individual from any source in the form of money, goods, property, and services that is not tax-exempt. Irs amendment It includes gross receipts from self-employment, but if the business involves manufacturing, merchandising, or mining, subtract any cost of goods sold. Irs amendment In general, filing status depends on whether the decedent was considered single or married at the time of death. Irs amendment See the income tax return instructions or Publication 501, Exemptions, Standard Deduction, and Filing Information. Irs amendment Refund A return must be filed to obtain a refund if tax was withheld from salaries, wages, pensions, or annuities, or if estimated tax was paid, even if a return is not otherwise required to be filed. Irs amendment Also, the decedent may be entitled to other credits that result in a refund. Irs amendment These advance payments of tax and credits are discussed later under Credits, Other Taxes, and Payments. Irs amendment Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer. Irs amendment   Form 1310 does not have to be filed if you are claiming a refund and you are: A surviving spouse filing an original or amended joint return with the decedent, or A court-appointed or certified personal representative filing the decedent’s original return and a copy of the court certificate showing your appointment is attached to the return. Irs amendment   If the personal representative is filing a claim for refund on Form 1040X, Amended U. Irs amendment S. Irs amendment Individual Income Tax Return, or Form 843, Claim for Refund and Request for Abatement, and the court certificate has already been filed with the IRS, attach Form 1310 and write “Certificate Previously Filed” at the bottom of the form. Irs amendment Example. Irs amendment Edward Green died before filing his tax return. Irs amendment You were appointed the personal representative for Edward's estate, and you file his Form 1040 showing a refund due. Irs amendment You do not need Form 1310 to claim the refund if you attach a copy of the court certificate showing you were appointed the personal representative. Irs amendment    If you are a surviving spouse and you receive a tax refund check in both your name and your deceased spouse's name, you can have the check reissued in your name alone. Irs amendment Return the joint-name check marked “VOID” to your local IRS office or the service center where you mailed your return, along with a written request for reissuance of the refund check. Irs amendment A new check will be issued in your name and mailed to you. Irs amendment Death certificate. Irs amendment   When filing the decedent's final income tax return, do not attach the death certificate or other proof of death to the final return. Irs amendment Instead, keep it for your records and provide it if requested. Irs amendment Nonresident Alien If the decedent was a nonresident alien who would have had to file Form 1040NR, U. Irs amendment S. Irs amendment Nonresident Alien Income Tax Return, you must file that form for the decedent's final tax year. Irs amendment See the Instructions for Form 1040NR for the filing requirements, due date, and where to file. Irs amendment Joint Return Generally, the personal representative and the surviving spouse can file a joint return for the decedent and the surviving spouse. Irs amendment However, the surviving spouse alone can file the joint return if no personal representative has been appointed before the due date for filing the final joint return for the year of death. Irs amendment This also applies to the return for the preceding year if the decedent died after the close of the preceding tax year and before filing the return for that year. Irs amendment The income of the decedent that was includible on his or her return for the year up to the date of death (see Income To Include, later) and the income of the surviving spouse for the entire year must be included in the final joint return. Irs amendment A final joint return with the decedent cannot be filed if the surviving spouse remarried before the end of the year of the decedent's death. Irs amendment The filing status of the decedent in this instance is married filing a separate return. Irs amendment For information about tax benefits to which a surviving spouse may be entitled, see Tax Benefits for Survivors, later, under Other Tax Information. Irs amendment Personal representative may revoke joint return election. Irs amendment   A court-appointed personal representative may revoke an election to file a joint return previously made by the surviving spouse alone. Irs amendment This is done by filing a separate return for the decedent within one year from the due date of the return (including any extensions). Irs amendment The joint return made by the surviving spouse will then be regarded as the separate return of that spouse by excluding the decedent's items and refiguring the tax liability. Irs amendment Relief from joint liability. Irs amendment   In some cases, one spouse may be relieved of joint liability for tax, interest, and penalties on a joint return for items of the other spouse that were incorrectly reported on the joint return. Irs amendment If the decedent qualified for this relief while alive, the personal representative can pursue an existing request, or file a request, for relief from joint liability. Irs amendment For information on requesting this relief, see Publication 971, Innocent Spouse Relief. Irs amendment Income To Include The decedent's income includible on the final return is generally determined as if the person were still alive except that the taxable period is usually shorter because it ends on the date of death. Irs amendment The method of accounting regularly used by the decedent before death also determines the income includible on the final return. Irs amendment This section explains how some types of income are reported on the final return. Irs amendment For more information about accounting methods, see Publication 538, Accounting Periods and Methods. Irs amendment Cash Method If the decedent accounted for income under the cash method, only those items actually or constructively received before death are included on the final return. Irs amendment Constructive receipt of income. Irs amendment   Interest from coupons on the decedent's bonds is constructively received by the decedent if the coupons matured in the decedent's final tax year, but had not been cashed. Irs amendment Include the interest income on the final return. Irs amendment   Generally, a dividend is considered constructively received if it was available for use by the decedent without restriction. Irs amendment If the corporation customarily mailed its dividend checks, the dividend was includible when received. Irs amendment If the individual died between the time the dividend was declared and the time it was received in the mail, the decedent did not constructively receive it before death. Irs amendment Do not include the dividend in the final return. Irs amendment Accrual Method Generally, under an accrual method of accounting, income is reported when earned. Irs amendment If the decedent used an accrual method, only the income items normally accrued before death are included on the final return. Irs amendment Interest and Dividend Income (Forms 1099) Form(s) 1099 reporting interest and dividends earned by the decedent before death should be received and the amounts included on the decedent's final return. Irs amendment A separate Form 1099 should show the interest and dividends earned after the date of the decedent's death and paid to the estate or other recipient that must include those amounts on its return. Irs amendment You can request corrected Forms 1099 if these forms do not properly reflect the right recipient or amounts. Irs amendment For example, a Form 1099-INT, reporting interest payable to the decedent, may include income that should be reported on the final income tax return of the decedent, as well as income that the estate or other recipient should report, either as income earned after death or as income in respect of the decedent (discussed later). Irs amendment For income earned after death, you should ask the payer for a Form 1099 that properly identifies the recipient (by name and identification number) and the proper amount. Irs amendment If that is not possible, or if the form includes an amount that represents income in respect of the decedent, report the interest as shown next under How to report. Irs amendment See U. Irs amendment S. Irs amendment savings bonds acquired from decedent under Income in Respect of a Decedent, later, for information on savings bond interest that may have to be reported on the final return. Irs amendment How to report. Irs amendment   If you are preparing the decedent's final return and you have received a Form 1099-INT for the decedent that includes amounts belonging to the decedent and to another recipient (the decedent's estate or another beneficiary), report the total interest shown on Form 1099-INT on Schedule B (Form 1040A or 1040), Interest and Ordinary Dividends. Irs amendment Next, enter a subtotal of the interest shown on Forms 1099, and the interest reportable from other sources for which you did not receive Forms 1099. Irs amendment Then, show any interest (including any interest you receive as a nominee) belonging to another recipient separately and subtract it from the subtotal. Irs amendment Identify the amount of this adjustment as “Nominee Distribution” or other appropriate designation. Irs amendment   Report dividend income for which you received a Form 1099-DIV, Dividends and Distributions, on the appropriate schedule using the same procedure. Irs amendment    Note. Irs amendment If the decedent received amounts as a nominee, you must give the actual owner a Form 1099, unless the owner is the decedent's spouse. Irs amendment See General Instructions for Certain Information Returns (Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G) for more information on filing Forms 1099. Irs amendment Partnership Income The death of a partner closes the partnership's tax year for that partner. Irs amendment Generally, it does not close the partnership's tax year for the remaining partners. Irs amendment The decedent's distributive share of partnership items must be figured as if the partnership's tax year ended on the date the partner died. Irs amendment To avoid an interim closing of the partnership books, the partners can agree to estimate the decedent's distributive share by prorating the amounts the partner would have included for the entire partnership tax year. Irs amendment On the decedent's final return, include the decedent's distributive share of partnership items for the following periods. Irs amendment The partnership's tax year that ended within or with the decedent's final tax year (the year ending on the date of death). Irs amendment The period, if any, from the end of the partnership's tax year in (1) to the decedent's date of death. Irs amendment Example. Irs amendment Mary Smith was a partner in XYZ partnership and reported her income on a tax year ending December 31. Irs amendment The partnership uses a tax year ending June 30. Irs amendment Mary died August 31, 2013, and her estate established its tax year through August 31. Irs amendment The distributive share of partnership items based on the decedent's partnership interest is reported as follows. Irs amendment Final Return for the Decedent—January 1 through August 31, 2013, includes XYZ partnership items from (a) the partnership tax year ending June 30, 2013, and (b) the partnership tax year beginning July 1, 2013, and ending August 31, 2013 (the date of death). Irs amendment Income Tax Return of the Estate—September 1, 2013, through August 31, 2014, includes XYZ partnership items for the period September 1, 2013, through June 30, 2014. Irs amendment S Corporation Income If the decedent was a shareholder in an S corporation, include on the final return the decedent's share of the S corporation's items of income, loss, deduction, and credit for the following periods. Irs amendment The corporation's tax year that ended within or with the decedent's final tax year (the year ending on the date of death). Irs amendment The period, if any, from the end of the corporation's tax year in (1) to the decedent's date of death. Irs amendment Self-Employment Income Include self-employment income actually or constructively received or accrued, depending on the decedent's accounting method. Irs amendment For self-employment tax purposes only, the decedent's self-employment income will include the decedent's distributive share of a partnership's income or loss through the end of the month in which death occurred. Irs amendment For this purpose, the partnership's income or loss is considered to be earned ratably over the partnership's tax year. Irs amendment Community Income If the decedent was married and domiciled in a community property state, half of the income received and half of the expenses paid during the decedent's tax year by either the decedent or spouse may be considered to be the income and expenses of the other. Irs amendment For more information, see Publication 555, Community Property. Irs amendment HSA, Archer MSA, or Medicare Advantage MSA The treatment of an HSA (health savings account), an Archer MSA (medical savings account), or a Medicare Advantage MSA at the death of the account holder, depends on who acquires the interest in the account. Irs amendment If the decedent's estate acquires the interest, the fair market value (FMV) of the assets in the account on the date of death is included in income on the decedent's final return. Irs amendment The estate tax deduction, discussed later, does not apply to this amount. Irs amendment If a beneficiary acquires the interest, see the discussion under Income in Respect of a Decedent, later. Irs amendment For other information on HSAs, Archer MSAs, or Medicare Advantage MSAs, see Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Irs amendment Coverdell Education Savings Account (ESA) Generally, the balance in a Coverdell ESA must be distributed within 30 days after the individual for whom the account was established reaches age 30, or dies, whichever is earlier. Irs amendment The treatment of the Coverdell ESA at the death of an individual under age 30 depends on who acquires the interest in the account. Irs amendment If the decedent's estate acquires the interest, the earnings on the account must be included on the final income tax return of the decedent. Irs amendment The estate tax deduction, discussed later, does not apply to this amount. Irs amendment If a beneficiary acquires the interest, see the discussion under Income in Respect of a Decedent, later. Irs amendment The age 30 limitation does not apply if the individual for whom the account was established or the beneficiary that acquires the account is an individual with special needs. Irs amendment This includes an individual who, because of a physical, mental, or emotional condition (including a learning disability), requires additional time to complete his or her education. Irs amendment For more information on Coverdell ESAs, see Publication 970, Tax Benefits for Education. Irs amendment Accelerated Death Benefits Accelerated death benefits are amounts received under a life insurance contract before the death of the insured individual. Irs amendment These benefits also include amounts received on the sale or assignment of the contract to a viatical settlement provider. Irs amendment Generally, if the decedent received accelerated death benefits on the life of a terminally or chronically ill individual, whether on his or her own life or on the life of another person, those benefits are not included in the decedent's income. Irs amendment For more information, see the discussion under Gifts, Insurance, and Inheritances under Other Tax Information, later. Irs amendment Exemptions and Deductions Generally, the rules for exemptions and deductions allowed to an individual also apply to the decedent's final income tax return. Irs amendment Show on the final return deductible items the decedent paid (or accrued, if the decedent reported deductions on an accrual method) before death. Irs amendment This section contains a detailed discussion of medical expenses because the tax treatment of the decedent's medical expenses can be different. Irs amendment See Medical Expenses, later. Irs amendment Exemptions You can claim the decedent's personal exemption on the final income tax return. Irs amendment If the decedent was another person's dependent (for example, a parent's), you cannot claim the personal exemption on the decedent's final return. Irs amendment Standard Deduction If you do not itemize deductions on the final return, the full amount of the appropriate standard deduction is allowed regardless of the date of death. Irs amendment For information on the appropriate standard deduction, see the Form 1040 income tax return instructions or Publication 501. Irs amendment Medical Expenses Medical expenses paid before death by the decedent are deductible, subject to limits, on the final income tax return if deductions are itemized. Irs amendment This includes expenses for the decedent, as well as for the decedent's spouse and dependents. Irs amendment Beginning in 2013, medical expenses exceeding 10% of adjusted gross income (AGI) may be deducted, unless the decedent or their spouse is age 65 or older. Irs amendment In that case medical expenses exceeding 7. Irs amendment 5% of AGI may be deducted. Irs amendment Qualified medical expenses are not deductible if paid with a tax-free distribution from an HSA or an Archer MSA. Irs amendment Election for decedent's expenses. Irs amendment   Medical expenses not paid before death are liabilities of the estate and are shown on the federal estate tax return (Form 706). Irs amendment However, if medical expenses for the decedent are paid out of the estate during the 1-year period beginning with the day after death, you can elect to treat all or part of the expenses as paid by the decedent at the time they were incurred. Irs amendment   If you make the election, you can claim all or part of the expenses on the decedent's income tax return (if deductions are itemized) rather than on the federal estate tax return (Form 706). Irs amendment You can deduct expenses incurred in the year of death on the final income tax return. Irs amendment You should file an amended return (Form 1040X) for medical expenses incurred in an earlier year, unless the statutory period for filing a claim for that year has expired. Irs amendment   The amount you can deduct on the income tax return is the amount above 10% of adjusted gross income (or 7. Irs amendment 5% of adjusted gross income if the decedent or the decedent's spouse was born before January 2, 1949). Irs amendment Amounts not deductible because of this percentage cannot be claimed on the federal estate tax return. Irs amendment Making the election. Irs amendment   You make the election by attaching a statement, in duplicate, to the decedent's income tax return or amended return. Irs amendment The statement must state that you have not claimed the amount as an estate tax deduction, and that the estate waives the right to claim the amount as a deduction. Irs amendment This election applies only to expenses incurred for the decedent, not to expenses incurred to provide medical care for dependents. Irs amendment Example. Irs amendment Richard Brown used the cash method of accounting and filed his income tax return on a calendar year basis. Irs amendment Richard died on June 1, 2013, at the age of 78, after incurring $800 in medical expenses. Irs amendment Of that amount, $500 was incurred in 2012 and $300 was incurred in 2013. Irs amendment Richard itemized his deductions when he filed his 2012 income tax return. Irs amendment The personal representative of the estate paid the entire $800 liability in August 2013. Irs amendment The personal representative may file an amended return (Form 1040X) for 2012 claiming the $500 medical expense as a deduction, subject to the 7. Irs amendment 5% limit. Irs amendment The $300 of expenses incurred in 2013 can be deducted on the final income tax return if deductions are itemized, subject to the 7. Irs amendment 5% limit. Irs amendment The personal representative must file a statement in duplicate with each return stating that these amounts have not been claimed on the federal estate tax return (Form 706), and waiving the right to claim such a deduction on Form 706 in the future. Irs amendment Medical expenses not paid by estate. Irs amendment   If you paid medical expenses for your deceased spouse or dependent, claim the expenses on your tax return for the year in which you paid them, whether they are paid before or after the decedent's death. Irs amendment If the decedent was a child of divorced or separated parents, the medical expenses can usually be claimed by both the custodial and noncustodial parent to the extent paid by that parent during the year. Irs amendment Insurance reimbursements. Irs amendment   Insurance reimbursements of previously deducted medical expenses due a decedent at the time of death and later received by the decedent's estate are includible in the income tax return of the estate (Form 1041) for the year the reimbursements are received. Irs amendment The reimbursements are also includible in the decedent's gross estate. Irs amendment No deduction for funeral expenses can be taken on the final Form 1040 of a decedent. Irs amendment These expenses may be deductible for estate tax purposes on Form 706. Irs amendment Deduction for Losses A decedent's net operating loss deduction from a prior year and any capital losses (including capital loss carryovers) can be deducted only on the decedent's final income tax return. Irs amendment A net operating loss on the decedent's final income tax return can be carried back to prior years. Irs amendment (See Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. Irs amendment ) You cannot deduct any unused net operating loss or capital loss on the estate's income tax return. Irs amendment At-risk loss limits. Irs amendment   Special at-risk rules apply to most activities that are engaged in as a trade or business or for the production of income. Irs amendment   These rules limit the deductible loss to the amount which the individual was considered at-risk in the activity. Irs amendment An individual generally will be considered at-risk to the extent of the money and the adjusted basis of property that he or she contributed to the activity and certain amounts the individual borrowed for use in the activity. Irs amendment An individual will be considered at-risk for amounts borrowed only if he or she was personally liable for the repayment or if the amounts borrowed were secured by property other than that used in the activity. Irs amendment The individual is not considered at-risk for borrowed amounts if the lender has an interest in the activity or if the lender is related to a person who has an interest in the activity. Irs amendment For more information, see Publication 925, Passive Activity and At-Risk Rules. Irs amendment Passive activity rules. Irs amendment   A passive activity is any trade or business activity in which the taxpayer does not materially participate. Irs amendment To determine material participation, see Publication 925. Irs amendment Rental activities are passive activities regardless of the taxpayer's participation, unless the taxpayer meets certain eligibility requirements. Irs amendment   Individuals, estates, and trusts can offset passive activity losses only against passive activity income. Irs amendment Passive activity losses or credits not allowed in one tax year can be carried forward to the next year. Irs amendment   If a passive activity interest is transferred because a taxpayer dies, the accumulated unused passive activity losses are allowed as a deduction against the decedent's income in the year of death. Irs amendment Losses are allowed only to the extent they are greater than the excess of the transferee's (recipient of the interest transferred) basis in the property over the decedent's adjusted basis in the property immediately before death. Irs amendment The part of the accumulated losses equal to the excess is not allowed as a deduction for any tax year. Irs amendment   Use Form 8582, Passive Activity Loss Limitations, to summarize losses and income from passive activities and to figure the amounts allowed. Irs amendment For more information, see Publication 925. Irs amendment Credits, Other Taxes, and Payments Discussed below are some of the tax credits, types of taxes that may be owed, income tax withheld, and estimated tax payments reported on the final return of a decedent. Irs amendment Credits On the final income tax return, you can claim any tax credits that applied to the decedent before death. Irs amendment Some of these credits are discussed next. Irs amendment Earned income credit. Irs amendment   If the decedent was an eligible individual, you can claim the earned income credit on the decedent's final return even though the return covers less than 12 months. Irs amendment If the allowable credit is more than the tax liability for the year, the excess is refunded. Irs amendment   For more information, see Publication 596, Earned Income Credit (EIC). Irs amendment Credit for the elderly or the disabled. Irs amendment   This credit is allowable on a decedent's final income tax return if the decedent met both of the following requirements in the year of death. Irs amendment The decedent: Was a “qualified individual,” and Had income (adjusted gross income (AGI) and nontaxable social security and pensions) less than certain limits. Irs amendment   For details on qualifying for or figuring the credit, see Publication 524, Credit for the Elderly or the Disabled. Irs amendment Child tax credit. Irs amendment   If the decedent had a qualifying child, you may be able to claim the child tax credit on the decedent's final return even though the return covers less than 12 months. Irs amendment You may be able to claim the additional child tax credit and get a refund if the credit is more than the decedent's liability. Irs amendment For more information, see the Instructions for Form 1040. Irs amendment Adoption credit. Irs amendment   Depending upon when the adoption was finalized, this credit may be taken on a decedent's final income tax return if the decedent: Adopted an eligible child and paid qualified adoption expenses, or Has a carryforward of an adoption credit from a prior year. Irs amendment   Also, if the decedent is survived by a spouse who meets the filing status of qualifying widow(er), unused adoption credit may be carried forward and used following the death of the decedent. Irs amendment See Form 8839, Qualified Adoption Expenses, and its instructions for more details. Irs amendment General business tax credit. Irs amendment   The general business credit available to a taxpayer is limited. Irs amendment Any credit arising in a tax year beginning before 1998 that has not been used up can be carried forward for up to 15 years. Irs amendment Any unused credit arising in a tax year beginning after 1997 has a 1-year carryback and a 20-year carryforward period. Irs amendment   After the carryforward period, a deduction may be allowed for any unused business credit. Irs amendment If the taxpayer dies before the end of the carryforward period, the deduction generally is allowed in the year of death. Irs amendment   For more information on the general business credit, see Publication 334, Tax Guide for Small Business. Irs amendment Other Taxes Taxes other than income tax that may be owed on the final return of a decedent include self-employment tax and alternative minimum tax, which are reported on Form 1040. Irs amendment Self-employment tax. Irs amendment   Self-employment tax may be owed on the final return if either of the following applied to the decedent in the year of death: Net earnings from self-employment (excluding income described in (2)) were $400 or more; or Wages from services performed as a church employee were $108. Irs amendment 28 or more. Irs amendment Alternative minimum tax (AMT). Irs amendment   The tax laws give special treatment to certain types of income and allow special deductions and credits for certain types of expenses. Irs amendment The alternative minimum tax (AMT) was enacted so taxpayers who benefit from these laws still pay at least a minimum amount of tax. Irs amendment In general, the AMT is the excess of the tentative minimum tax over the regular tax shown on the return. Irs amendment Form 6251. Irs amendment    Use Form 6251, Alternative Minimum Tax—Individuals, to determine if this tax applies to the decedent. Irs amendment See the form instructions for information on when you must attach Form 6251 to Form 1040. Irs amendment Form 8801. Irs amendment   If the decedent paid AMT in a previous year or had a credit carryforward, the decedent may be eligible for a minimum tax credit. Irs amendment See Form 8801, Credit for Prior Year Minimum Tax—Individuals, Estates, and Trusts. Irs amendment Payments of Tax The income tax withheld from the decedent's salary, wages, pensions, or annuities, and the amount paid as estimated tax are credits (advance payments of tax) that must be claimed on the final return. Irs amendment Tax Forgiveness for Armed Forces Members, Victims of Terrorism, and Astronauts Income tax liability may be forgiven for a decedent who dies due to service in a combat zone, due to military or terrorist actions, as a result of a terrorist attack, or while serving in the line of duty as an astronaut. Irs amendment Combat Zone If a member of the Armed Forces of the United States dies while in active service in a combat zone or from wounds, disease, or injury incurred in a combat zone, the decedent's income tax liability is abated (forgiven) for the entire year in which death occurred and for any prior tax year ending on or after the first day the person served in a combat zone in active service. Irs amendment For this purpose, a qualified hazardous duty area is treated as a combat zone. Irs amendment If the tax (including interest, additions to the tax, and additional amounts) for these years has been assessed, the assessment will be forgiven. Irs amendment If the tax has been collected (regardless of the date of collection), that tax will be credited or refunded. Irs amendment Any of the decedent's income tax for tax years before those mentioned above that remains unpaid as of the actual (or presumptive) date of death will not be assessed. Irs amendment If any unpaid tax (including interest, additions to the tax, and additional amounts) has been assessed, this assessment will be forgiven. Irs amendment Also, if any tax was collected after the date of death, that amount will be credited or refunded. Irs amendment The date of death of a member of the Armed Forces reported as missing in action or as a prisoner of war is the date his or her name is removed from missing status for military pay purposes. Irs amendment This is true even if death actually occurred earlier. Irs amendment For other tax information for members of the Armed Forces, see Publication 3, Armed Forces' Tax Guide. Irs amendment Military or Terrorist Actions The decedent's income tax liability is forgiven if, at death, he or she was a military or civilian employee of the United States who died because of wounds or injury incurred: While a U. Irs amendment S. Irs amendment employee, and In a military or terrorist action. Irs amendment The forgiveness applies to the tax year in which death occurred and for any earlier tax year, beginning with the year before the year in which the wounds or injury occurred. Irs amendment Example. Irs amendment The income tax liability of a civilian employee of the United States who died in 2013 because of wounds incurred while a U. Irs amendment S. Irs amendment employee in a terrorist attack that occurred in 2008 will be forgiven for 2013 and for all prior tax years in the period 2007 through 2012. Irs amendment Refunds are allowed for the tax years for which the period for filing a claim for refund has not ended, as discussed later. Irs amendment Military or terrorist action defined. Irs amendment   A military or terrorist action means the following. Irs amendment Any terrorist activity that most of the evidence indicates was directed against the United States or any of its allies. Irs amendment Any military action involving the U. Irs amendment S. Irs amendment Armed Forces and resulting from violence or aggression against the United States or any of its allies, or the threat of such violence or aggression. Irs amendment   Terrorist activity includes criminal offenses intended to coerce, intimidate, or retaliate against the government or civilian population. Irs amendment Military action does not include training exercises. Irs amendment Any multinational force in which the United States is participating is treated as an ally of the United States. Irs amendment Determining if a terrorist activity or military action has occurred. Irs amendment   You may rely on published guidance from the IRS to determine if a particular event is considered a terrorist activity or military action. Irs amendment Specified Terrorist Victim The Victims of Terrorism Tax Relief Act of 2001 (the Act) provides tax relief for those injured or killed as a result of terrorist attacks, certain survivors of those killed as a result of terrorist attacks, and others who were affected by terrorist attacks. Irs amendment Under the Act, the federal income tax liability of those killed in the following attacks (specified terrorist victim) is forgiven for certain tax years. Irs amendment The April 19, 1995, terrorist attack on the Alfred P. Irs amendment Murrah Federal Building (Oklahoma City). Irs amendment The September 11, 2001, terrorist attacks. Irs amendment The terrorist attacks involving anthrax occurring after September 10, 2001, and before January 1, 2002. Irs amendment The Act also exempts from federal income tax the following types of income. Irs amendment Qualified disaster relief payments made after September 10, 2001, to cover personal, family, living, or funeral expenses incurred because of a terrorist attack. Irs amendment Certain disability payments received in tax years ending after September 10, 2001, for injuries sustained in a terrorist attack. Irs amendment Certain death benefits paid by an employer to the survivor of an employee because the employee died as a result of a terrorist attack. Irs amendment Payments from the September 11th Victim Compensation Fund 2001. Irs amendment The Act also reduces the estate tax of individuals who die as a result of a terrorist attack. Irs amendment See Publication 3920, Tax Relief for Victims of Terrorist Attacks, for more information. Irs amendment Astronauts Legislation extended the tax relief available under the Victims of Terrorism Tax Relief Act of 2001 (the Act) to astronauts who died in the line of duty after December 31, 2002. Irs amendment The decedent's income tax liability is forgiven for the tax year in which death occurs, and for the tax year prior to death. Irs amendment For information on death benefit payments and the reduction of federal estate taxes, see Publication 3920. Irs amendment However, the discussions in that publication under Death Benefits and Estate Tax Reduction should be modified for astronauts (for example, by using the date of death of the astronaut instead of September 11, 2001). Irs amendment For more information on the Act, see Publication 3920. Irs amendment Claim for Credit or Refund If any of these tax-forgiveness situations applies to a prior year tax, any tax paid for which the period for filing a claim has not ended will be credited or refunded. Irs amendment If any tax is still due, it will be canceled. Irs amendment The normal period for filing a claim for credit or refund is 3 years after the return was filed or 2 years after the tax was paid, whichever is later. Irs amendment If death occurred in a combat zone or from wounds, disease, or injury incurred in a combat zone, the period for filing the claim is extended by: The amount of time served in the combat zone (including any period in which the individual was in missing status), plus The period of continuous qualified hospitalization for injury from service in the combat zone, if any, plus The next 180 days. Irs amendment Qualified hospitalization means any hospitalization outside the United States and any hospitalization in the United States of not more than 5 years. Irs amendment This extended period for filing the claim also applies to a member of the Armed Forces who was deployed outside the United States in a designated contingency operation. Irs amendment Filing a claim. Irs amendment   Use the following procedures to file a claim. Irs amendment If a U. Irs amendment S. Irs amendment individual income tax return (Form 1040, 1040A, or 1040EZ) has not been filed, you should make a claim for refund of any withheld income tax or estimated tax payments by filing Form 1040. Irs amendment Form W-2, Wage and Tax Statement, must accompany all returns. Irs amendment If a U. Irs amendment S. Irs amendment individual income tax return has been filed, you should make a claim for refund by filing Form 1040X. Irs amendment You must file a separate Form 1040X for each year in question. Irs amendment   You must file these returns and claims at the following address for regular mail (U. Irs amendment S. Irs amendment Postal Service). Irs amendment    Internal Revenue Service 333 W. Irs amendment Pershing, P5–6503 Kansas City, MO 64108   Identify all returns and claims for refund by writing “Iraq—KIA,” “Enduring Freedom—KIA,” “Kosovo Operation—KIA,” “Desert Storm—KIA,” or “Former Yugoslavia—KIA” in bold letters on the top of page 1 of the return or claim. Irs amendment On the applicable return, write the same phrase on the line for total tax. Irs amendment If the individual was killed in a terrorist or military action, put “KITA” on the front of the return and on the line for total tax. Irs amendment   Include an attachment showing the computation of the decedent's tax liability and a computation of the amount to be forgiven. Irs amendment On joint returns, make an allocation of the tax as described below under Joint returns. Irs amendment If you cannot make a proper allocation, attach a statement of all income and deductions allocable to each spouse and the IRS will make the proper allocation. Irs amendment   You must attach Form 1310 to all returns and claims for refund. Irs amendment However, for exceptions to filing Form 1310, see Form 1310. Irs amendment Statement of Person Claiming Refund Due a Deceased Taxpayer, under Refund, earlier. Irs amendment   You must also attach proof of death that includes a statement that the individual was a U. Irs amendment S. Irs amendment employee on the date of injury and on the date of death and died as the result of a military or terrorist action. Irs amendment For military and civilian employees of the Department of Defense, attach DD Form 1300, Report of Casualty. Irs amendment For other U. Irs amendment S. Irs amendment civilian employees killed in the United States, attach a death certificate and a certification (letter) from the federal employer. Irs amendment For other U. Irs amendment S. Irs amendment civilian employees killed overseas, attach a certification from the Department of State. Irs amendment   If you do not have enough tax information to file a timely claim for refund, you can suspend the period for filing a claim by filing Form 1040X. Irs amendment Attach Form 1310, any required documentation currently available, and a statement that you will file an amended claim as soon as you have the required tax information. Irs amendment Joint returns. Irs amendment   If a joint return was filed, only the decedent's part of the income tax liability is eligible for forgiveness. Irs amendment Determine the decedent's tax liability as follows. Irs amendment Figure the income tax for which the decedent would have been liable if a separate return had been filed. Irs amendment Figure the income tax for which the spouse would have been liable if a separate return had been filed. Irs amendment Multiply the joint tax liability by a fraction. Irs amendment The numerator of the fraction is the amount in (1), above. Irs amendment The denominator of the fraction is the total of (1) and (2). Irs amendment   The resulting amount from (3) above is the decedent's tax liability eligible for forgiveness. Irs amendment Filing Reminders To minimize the time needed to process the decedent's final return and issue any refund, be sure to follow these procedures. Irs amendment Write “DECEASED,” the decedent's name, and the date of death across the top of the tax return. Irs amendment If a personal representative has been appointed, the personal representative must sign the return. Irs amendment If it is a joint return, the surviving spouse must also sign it. Irs amendment If you are the decedent's spouse filing a joint return with the decedent and no personal representative has been appointed, write “Filing as surviving spouse” in the area where you sign the return. Irs amendment If no personal representative has been appointed and if there is no surviving spouse, the person in charge of the decedent's property must file and sign the return as “personal representative. Irs amendment ” To claim a refund for the decedent, do the following. Irs amendment If you are the decedent's spouse filing a joint return with the decedent, file only the tax return to claim the refund. Irs amendment If you are the personal representative and the return is not a joint return filed with the decedent's surviving spouse, file the return and attach a copy of the certificate that shows your appointment by the court. Irs amendment (A power of attorney or a copy of the decedent's will is not acceptable evidence of your appointment as the personal representative. Irs amendment ) If you are filing an amended return, attach Form 1310 and a copy of the certificate of appointment (or, if you have already sent the certificate of appointment to IRS, write “Certificate Previously Filed” at the bottom of Form 1310). Irs amendment If you are not filing a joint return as the surviving spouse and a personal representative has not been appointed, file the return and attach Form 1310. Irs amendment Other Tax Information Discussed below is information about the effect of an individual's death on the income tax liability of the survivors (including widows and widowers), the beneficiaries, and the estate. Irs amendment Tax Benefits for Survivors Survivors can qualify for certain benefits when filing their own income tax returns. Irs amendment Joint return by surviving spouse. Irs amendment   A surviving spouse can file a joint return for the year of death and may qualify for special tax rates for the following 2 years, as explained under Qualifying widows and widowers, later. Irs amendment Decedent as your dependent. Irs amendment   If the decedent qualified as your dependent for a part of the year before death, you can claim the exemption for the dependent on your tax return, regardless of when death occurred during the year. Irs amendment   If the decedent was your qualifying child, you may be able to claim the child tax credit or the earned income credit. Irs amendment To determine if you qualify for the child tax credit, see the instructions for Form 1040, line 51; Form 1040A, line 33; or Form 1040NR, line 48. Irs amendment To determine if you qualify for the earned income credit, see the instructions for Form 1040, lines 64a and 64b or Form 1040A, lines 38a and 38b. Irs amendment Qualifying widows and widowers. Irs amendment   If your spouse died within the 2 tax years preceding the year for which your return is being filed, you may be eligible to claim the filing status of qualifying widow(er) with dependent child and qualify to use the married-filing-jointly tax rates. Irs amendment Requirements. Irs amendment   Generally, you qualify for this special benefit if you meet all of the following requirements. Irs amendment You were entitled to file a joint return with your spouse for the year of death—whether or not you actually filed jointly. Irs amendment You did not remarry before the end of the current tax year. Irs amendment You have a child, stepchild, or foster child who qualifies as your dependent for the tax year. Irs amendment You provide more than half the cost of maintaining your home, which is the principal residence of that child for the entire year except for temporary absences. Irs amendment Example. Irs amendment William Burns' wife died in 2010. Irs amendment William has not remarried and continued throughout 2011 and 2012 to maintain a home for himself and his dependent child. Irs amendment For 2010, he was entitled to file a joint return for himself and his deceased wife. Irs amendment For 2011 and 2012, he qualifies to file as a qualifying widower with dependent child. Irs amendment For later years, he may qualify to file as a head of household. Irs amendment Figuring your tax. Irs amendment   Check the box on line 5 (Form 1040 or 1040A) under Filing Status on your tax return. Irs amendment Use the Tax Rate Schedule or the column in the Tax Table for Married filing jointly, which gives you the split-income benefits. Irs amendment   The last year you can file jointly with, or claim an exemption for, your deceased spouse is the year of death. Irs amendment Joint return filing rules. Irs amendment   If you are the surviving spouse and a personal representative is handling the estate for the decedent, you should coordinate filing your return for the year of death with this personal representative. Irs amendment See Joint Return under Final Income Tax Return for Decedent—Form 1040, earlier. Irs amendment Income in Respect of a Decedent All income the decedent would have received had death not occurred that was not properly includible on the final return, discussed earlier, is income in respect of a decedent. Irs amendment If the decedent is a specified terrorist victim (see Specified Terrorist Victim, earlier), income received after the date of death and before the end of the decedent's tax year (determined without regard to death) is excluded from the recipient's gross income. Irs amendment This exclusion does not apply to certain income. Irs amendment For more information, see Publication 3920. Irs amendment How To Report Income in respect of a decedent must be included in the income of one of the following. Irs amendment The decedent's estate, if the estate receives it. Irs amendment The beneficiary, if the right to income is passed directly to the beneficiary and the beneficiary receives it. Irs amendment Any person to whom the estate properly distributes the right to receive it. Irs amendment 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. Irs amendment See Estate Tax Deduction, later. Irs amendment Example 1. Irs amendment Frank Johnson owned and operated an apple orchard. Irs amendment He used the cash method of accounting. Irs amendment He sold and delivered 1,000 bushels of apples to a canning factory for $2,000, but did not receive payment before his death. Irs amendment The proceeds from the sale are income in respect of a decedent. Irs amendment When the estate was settled, payment had not been made and the estate transferred the right to the payment to his widow. Irs amendment When Frank's widow collects the $2,000, she must include that amount in her return. Irs amendment It is not reported on the final return of the decedent or on the return of the estate. Irs amendment Example 2. Irs amendment Assume the same facts as in Example 1, except that Frank used the accrual method of accounting. Irs amendment The amount accrued from the sale of the apples would be included on his final return. Irs amendment Neither the estate nor the widow would realize income in respect of a decedent when the money is later paid. Irs amendment Example 3. Irs amendment On February 1, George High, a cash method taxpayer, sold his tractor for $3,000, payable March 1 of the same year. Irs amendment His adjusted basis in the tractor was $2,000. Irs amendment George died on February 15, before receiving payment. Irs amendment 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. Irs amendment In other words, the income in respect of a decedent is the gain the decedent would have realized had he lived. Irs amendment Example 4. Irs amendment Cathy O'Neil was entitled to a large salary payment at the date of her death. Irs amendment The amount was to be paid in five annual installments. Irs amendment The estate, after collecting two installments, distributed the right to the remaining installments to you, the beneficiary. Irs amendment The payments are income in respect of a decedent. Irs amendment None of the payments were includible on Cathy's final return. Irs amendment 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. Irs amendment Example 5. Irs amendment You inherited the right to receive renewal commissions on life insurance sold by your father before his death. Irs amendment You inherited the right from your mother, who acquired it by bequest from your father. Irs amendment Your mother died before she received all the commissions she had the right to receive, so you received the rest. Irs amendment The commissions are income in respect of a decedent. Irs amendment None of these commissions were includible in your father's final return. Irs amendment The commissions received by your mother were included in her income. Irs amendment The commissions you received are not includible in your mother's income, even on her final return. Irs amendment You must include them in your income. Irs amendment Character of income. Irs amendment   The character of the income you receive in respect of a decedent remains the same as it would have been to the decedent if he or she were alive. Irs amendment If the income would have been a capital gain to the decedent, it will be a capital gain to you. Irs amendment Transfer of right to income. Irs amendment   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 fair market value of the right you transfer. Irs amendment   If you make a gift of such a right, you must include in your income the fair market value of the right at the time of the gift. Irs amendment   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. Irs amendment See Installment obligations, later. Irs amendment Transfer defined. Irs amendment   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. Irs amendment Installment obligations. Irs amendment   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. Irs amendment Include in your income the same profit the decedent would have included had death not occurred. Irs amendment For more information, see Publication 537, Installment Sales. Irs amendment   If you dispose of an installment obligation acquired from a decedent (other than by transfer to the obligor), the rules explained in Publication 537 for figuring gain or loss on the disposition apply to you. Irs amendment Transfer to obligor. Irs amendment   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). Irs amendment A transfer also occurs if the obligation was canceled either at death or by the estate or person receiving the obligation from the decedent. Irs amendment An obligation that becomes unenforceable is treated as having been canceled. Irs amendment   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 fair market value of the installment obligation at the time of transfer, reduced by the basis of the obligation. Irs amendment 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. Irs amendment   If the decedent and obligor were related persons, the fair market value of the obligation cannot be less than its face value. Irs amendment Specific Types of Income in Respect of a Decedent This section explains and provides examples of some specific types of income in respect of a decedent. Irs amendment Wages. Irs amendment   The entire amount of wages or other employee compensation earned by the decedent but unpaid at the time of death is income in respect of a decedent. Irs amendment The income is not reduced by any amounts withheld by the employer. Irs amendment If the income is $600 or more, the employer should report it in box 3 of Form 1099-MISC, Miscellaneous Income, and give the recipient a copy of the form or a similar statement. Irs amendment   Wages paid as income in respect of a decedent are not subject to federal income tax withholding. Irs amendment However, if paid during the calendar year of death, they are subject to withholding for social security and Medicare taxes. Irs amendment These taxes should be included on the decedent's Form W-2 along with the taxes withheld before death. Irs amendment These wages are not included in box 1 of Form W-2. Irs amendment   Wages paid as income in respect of a decedent after the year of death generally are not subject to withholding for any federal taxe