What is an “income in respect of a decedent”?
In California, an “income in respect of a decedent” is income that was earned by a person before they passed away, but which they did not receive before their death, and so becomes part of their estate. This type of income usually falls under the category of “income from investments” such as dividends, interest, rent, or royalties. Other examples include unpaid wages or vacation pay, or any other type of money that the decedent was owed at the time of their death. The laws governing the “income in respect of a decedent” vary from state to state. In California, this money is usually subject to the same rules as other inherited assets. For example, it is usually not subject to income tax and will pass to the beneficiaries of the estate according to the instructions said in the will. In addition, the executor of the estate will need to file a form with the IRS to report the income and properly account for the taxes due. It is important to understand the laws surrounding the “income in respect of a decedent” in California to ensure that the estate is properly handled, and the rights of the beneficiaries are respected. If you are not sure of the laws in your area, it is best to consult a lawyer or other financial professional to make sure you have all the right information.
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