PDF document

- 1 -

                            Userid: CPM               Schema: tipx Leadpct: 100% Pt. size: 10             Draft           Ok to Print
AH XSL/XML                  Fileid: … tions/p559/2022/a/xml/cycle02/source                           (Init. & Date) _______

Page 1 of 51                                                                                           10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

           Department of the Treasury                         Contents
           Internal Revenue Service
                                                              Reminders    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
                                                              Introduction   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
Publication 559
Cat. No. 15107U                                               Personal Representative            . . . . . . . . . . . . . . . . . . . .   3
                                                              Duties       . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
                                                              Fees Received . . . . . . . . . . . . . . . . . . . . . . . . . .            5
Survivors,                                                    Final Income Tax Return for Decedent—Form 
                                                              1040 or 1040-SR . . . . . . . . . . . . . . . . . . . . . . . .              5
                                                              Name, Address, and Signature                   . . . . . . . . . . . . . .   5
Executors, and 
                                                              When and Where To File               . . . . . . . . . . . . . . . . . . .   5
                                                              Filing Requirements            . . . . . . . . . . . . . . . . . . . . . .   5
Administrators                                                Income To Include            . . . . . . . . . . . . . . . . . . . . . . .   6
                                                              Deductions         . . . . . . . . . . . . . . . . . . . . . . . . . . . .   8
For use in preparing                                          Credits, Other Taxes, Payments                   . . . . . . . . . . . . .   9
                                                              Tax Forgiveness for Armed Forces Members, 
2022 Returns                                                  Victims of Terrorism, and Astronauts                       . . . . . . .     10
                                                              Filing Reminders           . . . . . . . . . . . . . . . . . . . . . . .     12
                                                              Other Tax Information          . . . . . . . . . . . . . . . . . . . . .     13
                                                              Tax Benefits for Survivors             . . . . . . . . . . . . . . . . .     13
                                                              Income in Respect of Decedent . . . . . . . . . . . . .                      13
                                                              Deductions in Respect of Decedent . . . . . . . . . .                        17
                                                              Estate Tax Deduction             . . . . . . . . . . . . . . . . . . . .     17
                                                              Gifts, Insurance, Inheritances               . . . . . . . . . . . . . .     18
                                                              Other Items of Income . . . . . . . . . . . . . . . . . . . .                21
                                                              Income Tax Return of an Estate—Form 1041 . . . .                             22
                                                              Filing Requirements            . . . . . . . . . . . . . . . . . . . . .     22
                                                              Income To Include            . . . . . . . . . . . . . . . . . . . . . .     24
                                                              Exemption and Deductions                 . . . . . . . . . . . . . . . .     25
                                                              Credits, Tax, and Payments               . . . . . . . . . . . . . . . .     29
                                                              Name, Address, and Signature                   . . . . . . . . . . . . .     30
                                                              When and Where To File               . . . . . . . . . . . . . . . . . .     30
                                                              Distributions to Beneficiaries           . . . . . . . . . . . . . . . .     30
                                                              Currently Distributed Income . . . . . . . . . . . . . . .                   31
                                                              Other Amounts Distributed                . . . . . . . . . . . . . . . .     31
                                                              Discharge of a Legal Obligation . . . . . . . . . . . . .                    32
                                                              Character of Distributions             . . . . . . . . . . . . . . . . .     32
                                                              How and When To Report . . . . . . . . . . . . . . . . .                     33
                                                              Bequest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          33
                                                              Termination of Estate            . . . . . . . . . . . . . . . . . . . .     34
                                                              Estate and Gift Taxes . . . . . . . . . . . . . . . . . . . . . .            36
                                                              Gift Tax     . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     37
                                                              Estate Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .           39
                                                              Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      40
                                                              Final Return for Decedent              . . . . . . . . . . . . . . . . .     41
                                                              Income Tax Return of an Estate . . . . . . . . . . . . .                     42
                                                              Table A. Checklist of Forms and Due Dates . . . . .                          44
Get forms and other information faster and easier at:         Table B. Worksheet To Reconcile Amounts 
• IRS.gov (English)         • IRS.gov/Korean (한국어)            Reported in Name of Decedent                       . . . . . . . . . . .     45
• IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский) 
• IRS.gov/Chinese (中文)      • IRS.gov/Vietnamese (Tiếng Việt) How To Get Tax Help          . . . . . . . . . . . . . . . . . . . . . .     46

Dec 7, 2022

- 2 -

Page 2 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 this publication on pages that would otherwise be blank.
You can help bring these children home by looking at the
photographs and calling 1-800-THE-LOST
(1-800-843-5678) if you recognize a child.
Future Developments
For the latest information about developments related to
Pub. 559, such as legislation enacted after it was
Introduction
published, go to IRS.gov/Pub 559.
This publication is designed to help those in charge (per-
sonal representatives) of the property (estate) of an indi-
vidual who has died (decedent). It shows how to complete
What’s New and file federal income tax returns and explains their re-
Filing status name changed to qualifying surviving sponsibility to pay any taxes due on behalf of the dece-
spouse. The filing status qualifying widow(er) is now dent. An example of the decedent's final tax return, Form
called qualifying surviving spouse. The rules for the filing 1040, U.S. Individual Income Tax Return, and the estate's
status have not changed. The same rules that applied to income tax return, Form 1041, U.S. Income Tax Return for
qualifying widow(er) apply to qualifying surviving spouse. Estates and Trusts, are discussed in this publication.
See Qualifying surviving spouse, later. The publication also explains how much money or
property a taxpayer can give away during their lifetime or
Extension of time to elect portability. Effective July 8, leave to their heirs at their death, before any tax will be
2022, Rev. Proc. 2022-32 provides a simplified method owed. A discussion of Form 709, United States Gift (and
for certain estates to obtain an extension of time to file a Generation-Skipping Transfer) Tax Return, and Form 706,
return on or before the fifth anniversary of the decedent’s United States Estate (and Generation-Skipping Transfer)
death to elect portability of the deceased spousal unused Tax Return, is included.
exclusion (DSUE) amount. See Filing requirements, later, Also included in this publication are the following items.
for more information.
• A checklist of the forms you may need and their due
dates.
Reminders • A worksheet to reconcile amounts reported in the de-
cedent's name on information returns including Forms
Net operating loss (NOL) carryback. Generally, an W-2, Wage and Tax Statement; 1099-INT, Interest In-
NOL arising in a tax year beginning in 2021 or later may come; 1099-DIV, Dividends and Distributions; etc.
not be carried back and instead must be carried forward The worksheet will help you correctly determine the in-
indefinitely. However, farming losses arising in tax years come to report on the decedent's final return and on
beginning in 2021 or later may be carried back 2 years the return for either the estate or a beneficiary.
and carried forward indefinitely.
For special rules for NOLs arising in 2018, 2019, or Comments and suggestions. We welcome your com-
2020, see Pub. 536, Net Operating Losses (NOLs) for In- ments about this publication and your suggestions for fu-
dividuals, Estates, and Trusts, for more information. ture editions.
You can send us comments through IRS.gov/
Excess deductions on termination. Under Final FormComments. Or you can write to: Internal Revenue
Regulations - TD9918, each excess deduction on termi- Service, Tax Forms and Publications Division, 1111 Con-
nation of an estate or trust retains its separate character stitution Ave. NW, IR-6526, Washington, DC 20224.
as an amount allowed in arriving at adjusted gross income Although we can’t respond individually to each com-
(AGI), a non-miscellaneous itemized deduction, or a mis- ment received, we do appreciate your feedback and will
cellaneous itemized deduction. For more information, see consider your comments as we revise our tax forms, in-
the Instructions for Form 1041. structions, and publications. Don’t send tax questions, tax
Consistent treatment of estate and trust items. Bene- returns, or payments to the above address.
ficiaries must generally treat estate items the same way
on their individual returns as they are treated on the es- Getting answers to your tax questions. If you have a
tate's return. tax question not answered by this publication, or the How
To Get Tax Help at the end of this publication, go to the
Consistent basis reporting between estate and per-
IRS Interactive Tax Assistant page at IRS.gov/help/ITA
son acquiring property from a decedent. Certain ex-
where you can find topics using the search feature or by
ecutors are required to report the estate tax value of prop-
viewing the categories listed.
erty passing from a decedent to the IRS and to the
recipient of the property (beneficiary). See Consistent Ba- Getting tax forms, instructions, and publications. Go
sis Reporting Requirement, later, for more information. to IRS.gov/Forms to download current and prior-year
Photographs of missing children. The Internal Reve- forms, instructions, and publications.
nue Service is a proud partner with the National Center for
Missing & Exploited Children® (NCMEC). Photographs of Ordering tax forms, instructions, and publications.
missing children selected by the Center may appear in Go to IRS.gov/OrderForms to order current forms,

Page 2 Publication 559 (2022)

- 3 -

Page 3 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

instructions, and publications; call 800-829-3676 to order Duties
prior-year forms and instructions. The IRS will process
your order for forms and publications as soon as possible. The primary duties of a personal representative are to col-
Don’t resubmit requests you’ve already sent us. You can lect all the decedent's assets, pay the decedent’s cred-
get forms and publications faster online. itors, and distribute the remaining assets to the heirs or
other beneficiaries.
Useful Items The personal representative must also perform the fol-
You may want to see:
lowing duties.
Publication • Apply for an employer identification number (EIN) for
the estate.
3 3 Armed Forces' Tax Guide
• File all tax returns, including income, estate, and gift
Form (and Instructions) tax returns, when due.
SS-4 SS-4 Application for Employer Identification Number • Pay the tax determined up to the date of discharge
from duties.
56 56 Notice Concerning Fiduciary Relationship Other duties of the personal representative in federal tax
1040 1040 U.S. Individual Income Tax Return matters are discussed in other sections of this publication.
If any beneficiary is a nonresident alien, see Pub. 515,
1040-SR 1040-SR U.S. Tax Return for Seniors Withholding of Tax on Nonresident Aliens and Foreign En-
tities, for information on the personal representative's du-
1041 1041 U.S. Income Tax Return for Estates and Trusts ties as a withholding agent.
706 706 United States Estate (and Generation-Skipping Penalty. There is a penalty for failure to file a tax re-
Transfer) Tax Return turn when due unless the failure is due to reasonable
cause. Reliance on an agent (attorney, accountant, etc.)
709 709 United States Gift (and Generation-Skipping
isn't reasonable cause for late filing. It is the personal rep-
Transfer) Tax Return
resentative's duty to file the returns for the decedent and
1310 1310 Statement of Person Claiming Refund Due a the estate when due.
Deceased Taxpayer
Identification number. The first action you should take if
See How To Get Tax Help near the end of this publication you’re the personal representative for the decedent is to
for information about getting publications and forms. Also apply for an EIN for the estate. You should apply for this
near the end of this publication is Table A, a checklist of number as soon as possible because you need to enter it
forms and their due dates for the executor, administrator, on returns, statements, and other documents you file con-
or personal representative. cerning the estate. You must also give the identification
number to payers of interest and dividends and other pay-
ers who must file a return concerning the estate.
You can get an EIN by applying online at IRS.gov/EIN.
Personal Representative Generally, if you apply online, you will receive your EIN
immediately upon completing the application. You can
A personal representative of an estate is an executor, ad-
also apply using Form SS-4. Generally, if you apply by
ministrator, or anyone who is in charge of the decedent's
mail, it takes about 4 weeks to get your EIN. See IRS.gov/
property. Generally, an executor (or executrix) is named in
Businesses/Small-Businesses-&-Self-Employed/
a decedent's will to administer the estate and distribute
Employer-ID-Numbers-EINs for other ways to apply.
properties as the decedent has directed. An administrator
Payers of interest and dividends report amounts on
(or administratrix) is usually appointed by the court if no
Forms 1099 using the identification number of the person
will exists, if no executor was named in the will, or if the
to whom the account is payable. After a decedent's death,
named executor can't or won't serve.
Forms 1099 must reflect the identification number (EIN,
In general, an executor and an administrator perform individual identification number (ITIN), or social security
the same duties and have the same responsibilities. number (SSN)) of the estate or beneficiary to whom the
amounts are payable. As the personal representative han-
For estate tax purposes, if there is no executor or ad- dling the estate, you must furnish this identification num-
ministrator appointed, qualified, and acting within the Uni- ber to the payer. For example, if interest is payable to the
ted States, the term “executor” includes anyone in actual estate, the estate's EIN must be provided to the payer and
or constructive possession of any property of the dece- used to report the interest on Form 1099-INT. If the inter-
dent. It includes, among others, the decedent's agents est is payable to a surviving joint owner, the survivor's
and representatives; safe-deposit companies, warehouse identification number, such as an SSN or ITIN, must be
companies, and other custodians of property in this coun- provided to the payer and used to report the interest.
try; brokers holding securities of the decedent as collat- If the estate or a survivor may receive interest or divi-
eral; and the debtors of the decedent who are in this coun- dends after you inform the payer of the decedent's death,
try. the payer should give you (or the survivor) a Form W-9,

Publication 559 (2022) Page 3

- 4 -

Page 4 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Request for Taxpayer Identification Number and Certifica- and an earlier final distribution of the assets to the benefi-
tion (or a similar substitute form). Complete this form to in- ciaries.
form the payer of the estate's (or if completed by the survi-
Form 4810. Form 4810 can be used for making this
vor, the survivor's) identification number and return it to
request. It must be filed separately from any other docu-
the payer.
ment.
Don't use the deceased individual's identifying As the personal representative for the decedent's es-
! number to file an individual income tax return after tate, you are responsible for any additional taxes that may
CAUTION the decedent's final tax return. Also don't use the be due. You can request prompt assessment of any of the
decedent's identifying number to make estimated tax pay- decedent's taxes (other than federal estate taxes) for any
ments for a tax year after the year of death. years for which the statutory period for assessment is
open. This applies even though the returns were filed be-
Penalty. If you don't include the EIN or the taxpayer fore the decedent's death.
identification number (TIN) of another person where it is
required on a return, statement, or other document, you Failure to report income. If you or the decedent
are liable for a penalty for each failure, unless you can failed to report substantial amounts of gross income (more
show reasonable cause. You are also liable for a penalty if than 25% of the gross income reported on the return) or
you don't give the TIN of another person when required on filed a false or fraudulent return, your request for prompt
a return, statement, or other document. assessment won't shorten the period during which the IRS
may assess the additional tax. However, such a request
Notice of fiduciary relationship. The term “fiduciary” may relieve you of personal liability for the tax if you didn't
means any person acting for another person. It applies to have knowledge of the unpaid tax.
persons who have positions of trust on behalf of others. It
generally includes a guardian, trustee, executor, adminis- Request for discharge from personal liability for tax.
trator, receiver, or conservator. A personal representative An executor can make a request for discharge from per-
for a decedent's estate is also a fiduciary. sonal liability for a decedent's income, gift, and estate
taxes. The request must be made after the returns for
Form 56. If you are appointed to act in a fiduciary ca- those taxes are filed. To make the request, file Form 5495.
pacity for another, you must file a written notice with the For this purpose, an executor is an executor or adminis-
IRS stating this. Form 56 is used for this purpose. See the trator that is appointed, qualified, and acting within the
Instructions for Form 56 for filing requirements and other United States.
information. Within 9 months after receipt of the request, the IRS will
File Form 56 as soon as all the necessary information notify the executor of the amount of taxes due. If this
(including the EIN) is available. It notifies the IRS that you, amount is paid, the executor will be discharged from per-
as the fiduciary, are assuming the powers, rights, duties, sonal liability for any future deficiencies. If the IRS hasn’t
and privileges of the decedent. The notice remains in ef- notified the executor at the end of the 9-month period, the
fect until you notify the IRS (by filing another Form 56) that executor will be discharged from personal liabilities.
your fiduciary relationship with the estate has terminated.
Even if the executor is discharged from personal
Termination of fiduciary relationship. Form 56 ! liability, the IRS will still be able to assess tax defi-
should also be filed to notify the IRS if your fiduciary rela- CAUTION ciencies against the executor to the extent the ex-
tionship is terminated or when a successor fiduciary is ap- ecutor still has any of the decedent's property.
pointed if the estate hasn't been terminated. See Form 56
and its instructions for more information. Insolvent estate. Generally, if a decedent's estate is in-
At the time of termination of the fiduciary relationship, sufficient to pay all the decedent's debts, the debts due to
you may want to file Form 4810, Request for Prompt As- the United States must be paid first. Both the decedent's
sessment Under Internal Revenue Code Section 6501(d), federal income tax liabilities at the time of death and the
and Form 5495, Request for Discharge From Personal Li- estate's income tax liability are debts due to the United
ability Under Internal Revenue Code Section 2204 or States. The personal representative of an insolvent estate
6905, to wind up your duties as fiduciary. See below for a is personally responsible for any tax liability of the dece-
discussion of these forms. dent or of the estate if the personal representative had no-
tice of such tax obligations or failed to exercise due care
Request for prompt assessment (charge) of tax. The
in determining if such obligations existed before distribu-
IRS ordinarily has 3 years from the date an income tax re-
tion of the estate's assets and before being discharged
turn is filed, or its due date, whichever is later, to charge
from duties. The extent of such personal responsibility is
any additional tax due. However, as a personal represen-
the amount of any other payments made before paying
tative, you may request a prompt assessment of tax after
the debts due to the United States, except where such
the return has been filed. This reduces the time for making
other debt paid has priority over the debts due to the Uni-
the assessment to 18 months from the date the written re-
ted States. Income tax liabilities need not be formally as-
quest for prompt assessment was received. This request
sessed for the personal representative to be liable if the
can be made for any tax return (except the estate tax re-
personal representative was aware or should have been
turn) of the decedent or the decedent's estate. This may
aware of their existence.
permit a quicker settlement of the tax liability of the estate

Page 4 Publication 559 (2022)

- 5 -

Page 5 of 51     Fileid: … tions/p559/2022/a/xml/cycle02/source                                      10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Fees Received by Personal                                             family member, or any other person you choose. This al-
                                                                      lows the IRS to call the person you identified as the desig-
Representatives                                                       nee  to  answer  any  questions  that  may  arise  during  the 
                                                                      processing  of  the  return.  It  also  allows  the  designee  to 
All  personal  representatives  must  include  fees  paid  to 
                                                                      perform  certain  actions.  See  the  Instructions  for  Form 
them from an estate in their gross income. If you aren't in 
                                                                      1040 (and 1040-SR) for details.
the trade or business of being an executor (for instance, 
you are the executor of a friend's or relative's estate), re-         Signature. If a personal representative has been appoin-
port these fees on your Schedule 1 (Form 1040), line 8z. If           ted, that person must sign the return. If it is a joint return, 
you are in the trade or business of being an executor, re-            the surviving spouse must also sign it. If no personal rep-
port fees received from the estate as self-employment in-             resentative has been appointed, the surviving spouse (on 
come  on  Schedule  C  (Form  1040),  Profit  or  Loss  From          a joint return) signs the return and writes in the signature 
Business.                                                             area “Filing as surviving spouse.” If no personal represen-
If the estate operates a trade or business and you, as                tative  has  been  appointed  and  if  there  is  no  surviving 
executor,  actively  participate  in  the  trade  or  business        spouse, the person in charge of the decedent's property 
while fulfilling your duties, any fees you receive related to         must file and sign the return as “personal representative.”

the operation of the trade or business must be reported as            Paid preparer. If you pay someone to prepare, assist in 
self-employment income on Schedule C (Form 1040).                     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.  See  the  Form  1040  and 
Final Income Tax Return for                                           1040-SR instructions for details.

Decedent—Form 1040 or 
                                                                      When and Where To File
1040-SR
                                                                      The final income tax return is due at the same time the de-
The personal representative (defined earlier) must file the           cedent's  return  would  have  been  due  had  death  not  oc-
final income tax return (Form 1040 or 1040-SR) of the de-             curred. A final return for a decedent who was a calendar 
cedent for the year of death and any returns not filed for            year  taxpayer  is  generally  due  on  April  15  following  the 
preceding  years.  A  surviving  spouse,  under  certain  cir-        year of death, regardless of when during that year death 
cumstances, may have to file the returns for the decedent.            occurred.  However,  when  the  due  date  falls  on  a  Satur-
See Joint Return, later.                                              day, Sunday, or legal holiday, the return is filed timely if 
                                                                      filed by the next business day.
Return for preceding year.   If an individual died after the          Generally,  you  must  file  the  final  income  tax  return  of 
close  of  the  tax  year,  but  before  the  return  for  that  year the decedent with the Internal Revenue Service Center for 
was filed, the return for the year just closed won't be the           the place where you live. A tax return for a decedent can 
final return. The return for that year will be a regular return       be electronically filed. A personal representative may also 
and the personal representative must file it.                         obtain an income tax filing extension on behalf of a dece-
Example.  S. Smith died on March 21, 2022, before fil-                dent.
ing the 2021 tax return. The personal representative must 
file the 2021 return by April 15, 2022. The final tax return          Filing Requirements
covering  the  period  from  January  1,  2022,  to  March  20, 
2022, is due April 15, 2023.                                          The  gross  income,  age,  and  filing  status  of  a  decedent 
                                                                      generally determine whether a return must be filed. Gross 
Note. See When and Where To File, later, if the due                   income  is  all  income  received  by  an  individual  from  any 
date falls on a weekend or legal holiday. See Pub. 509,               source in the form of money, goods, property, and serv-
Tax Calendars, for a list of all legal holidays.                      ices that isn't tax-exempt. It includes gross receipts from 
                                                                      self-employment, but if the business involves manufactur-
Name, Address, and Signature                                          ing, merchandising, or mining, subtract any cost of goods 
                                                                      sold. In general, filing status depends on whether the de-
Write the word “DECEASED,” the decedent's name, and                   cedent  was  considered  single  or  married  at  the  time  of 
the date of death across the top of the tax return. If filing a       death. See the income tax return instructions or Pub. 501, 
joint return, write the name and address of the decedent              Dependents, Standard Deduction, and Filing Information.
and the surviving spouse in the name and address fields. 
If a joint return isn't being filed, write the decedent's name        Refund
in the name field and the personal representative's name 
and address in the address field.                                     A return must be filed to obtain a refund if tax was withheld 
                                                                      from salaries, wages, pensions, or annuities, or if estima-
Third party designee.    You can check the “Yes” box in               ted tax was paid, even if a return isn't otherwise required 
the Third Party Designee area on Form 1040 or 1040-SR                 to  be  filed.  Also,  the  decedent  may  be  entitled  to  other 
to authorize the IRS to discuss the return with a friend, a           credits that result in a refund. These advance payments of 

Publication 559 (2022)                                                                                                   Page 5

- 6 -

Page 6 of 51         Fileid: … tions/p559/2022/a/xml/cycle02/source                                  10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

tax  and  credits  are  discussed  later  under Credits,  Other      that year. The income of the decedent that was includible 
Taxes, and Payments.                                                 on  the  decedent’s  return  for  the  year  up  to  the  date  of 
                                                                     death  (see  Income  To  Include,  later)  and  the  income  of 
Form  1310,  Statement  of  Person  Claiming  Refund                 the surviving spouse for the entire year must be included 
Due a Deceased Taxpayer.     Form 1310 doesn't have to               on the final joint return.
be filed if you are claiming a refund and either of the fol-
lowing applies to you.                                               A final joint return with the decedent can't be filed if the 
• You are a surviving spouse filing an original or amen-             surviving spouse remarried before the end of the year of 
  ded joint return with the decedent.                                the decedent's death. The filing status of the decedent in 
                                                                     this instance is married filing a separate return.
• You are a court-appointed or certified personal repre-
  sentative filing the decedent’s original return and a              For information about tax benefits to which a surviving 
  copy of the court certificate showing your appointment             spouse  may  be  entitled,  see Tax  Benefits  for  Survivors, 
  is attached to the return.                                         later, under Other Tax Information.
If the personal representative is filing a claim for refund 
                                                                     Personal representative may revoke joint return elec-
on  Form  1040-X,  Amended  U.S.  Individual  Income  Tax 
                                                                     tion. A  court-appointed  personal  representative  may  re-
Return,  or  Form  843,  Claim  for  Refund  and  Request  for 
                                                                     voke an election to file a joint return previously made by 
Abatement,  and  the  court  certificate  has  already  been 
                                                                     the surviving spouse alone. This is done by filing a sepa-
filed with the IRS, attach Form 1310 and write “Certificate 
                                                                     rate  return  for  the  decedent  within  1  year  from  the  due 
Previously Filed” at the bottom of the form.
                                                                     date of the return (including any extensions). The joint re-
Example. E.  Green  died  before  filing  the  tax  return.          turn filed by the surviving spouse will then be regarded as 
You  were  appointed  the  personal  representative  for  E.         the separate return of that spouse by excluding the dece-
Green's  estate,  and  you  file  the  Form  1040  or  1040-SR       dent's items and refiguring the tax liability.
showing a refund due. You don't need Form 1310 to claim              Relief from joint liability.    In some cases, one spouse 
the refund if you attach a copy of the court certificate to          may be relieved of joint liability for tax, interest, and penal-
the  tax  return  showing  you  were  appointed  the  personal       ties  on  a  joint  return  for  items  of  the  other  spouse  that 
representative.                                                      were incorrectly reported on the joint return. If the dece-
       If  you  are  a  surviving  spouse  and  you  receive  a      dent qualified for this relief while alive, the personal repre-
TIP    tax refund check in both your name and your de-               sentative can pursue an existing request, or file a request, 
       ceased spouse's name, you can have the check                  for relief from joint liability. For information on requesting 
reissued in your name alone. Return the joint-name check             this relief, see Pub. 971, Innocent Spouse Relief.
marked “VOID” along with Form 1310 to your local IRS of-
fice  or  the  service  center  where  you  mailed  your  return,    Income To Include
along with a written request for reissuance of the refund 
check.  A  new  check  will  be  issued  in  your  name  and         The  decedent's  income  includible  on  the  final  return  is 
mailed to you.                                                       generally determined as if the person were still alive ex-
                                                                     cept that the tax period is usually shorter because it ends 
Death  certificate. When  filing  the  decedent's  final  in-        on the date of death. The method of accounting regularly 
come tax return, don't attach the death certificate or other         used  by  the  decedent  before  death  also  determines  the 
proof of death to the final return. Instead, keep it for your        income includible on the final return. This section explains 
records and provide it if requested.                                 how  some  types  of  income  are  reported  on  the  final  re-
                                                                     turn.
Nonresident Alien                                                    For  more  information  about  accounting  methods,  see 
                                                                     Pub. 538, Accounting Periods and Methods.
If the decedent was a nonresident alien who would have 
had to file Form 1040-NR, U.S. Nonresident Alien Income 
                                                                     Cash Method
Tax Return, you must file that form for the decedent's final 
tax year. See the Instructions for Form 1040-NR for the fil-         If  the  decedent  accounted  for  income  under  the  cash 
ing requirements, due date, and where to file.                       method,  only  those  items  actually  or  constructively  re-
                                                                     ceived before death are included on the final return.
Joint Return
                                                                     Constructive receipt of income.    Interest from coupons 
Generally,  the  personal  representative  and  the  surviving       on the decedent's bonds is constructively received by the 
spouse can file a joint return for the decedent and the sur-         decedent  if  the  coupons  matured  in  the  decedent's  final 
viving spouse. However, the surviving spouse alone can               tax year but had not been cashed. Include the interest in-
file the joint return if no personal representative has been         come on the final return.
appointed before the due date for filing the final joint re-         Generally,  a  dividend  is  considered  constructively  re-
turn for the year of death. This also applies to the return          ceived if it was available for use by the decedent without 
for the preceding year if the decedent died after the close          restriction.  If  the  corporation  customarily  mailed  its  divi-
of  the  preceding  tax  year  and  before  filing  the  return  for dend checks, the dividend was includible when received. 

Page 6                                                                                               Publication 559 (2022)

- 7 -

Page 7 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

If the individual died between the time the dividend was Note. If the decedent received amounts as a nominee,
declared and the time it was received in the mail, the de- you must give the actual owner a Form 1099, unless the
cedent didn't constructively receive it before death. Don't owner is the decedent's spouse. See the General Instruc-
include the dividend in the final return. tions for Certain Information Returns for more information
on filing Forms 1099.
Accrual Method
Partnership Income
Generally, under an accrual method of accounting, in-
come is reported when earned. The death of a partner closes the partnership's tax year
for that partner. Generally, it doesn't close the partner-
If the decedent used an accrual method, only the in- ship's tax year for the remaining partners. The decedent's
come items normally accrued before death are included distributive share of partnership items must be figured as
on the final return. if the partnership's tax year ended on the date the partner
died. To avoid an interim closing of the partnership books,
the partners can agree to estimate the decedent's distrib-
Interest and Dividend Income (Forms 1099)
utive share by prorating the amounts the partner would
have included for the entire partnership tax year.
Form(s) 1099 reporting interest and dividends earned by
the decedent before death should be received and the On the decedent's final return, include the decedent's
amounts included on the decedent's final return. A sepa- distributive share of partnership items for the following pe-
rate Form 1099 should show the interest and dividends riods.
earned after the date of the decedent's death and paid to
the estate or other recipient that must include those 1. The partnership's tax year that ended within or with
amounts on its return. You can request corrected Forms the decedent's final tax year (the year ending on the
1099 if these forms don't properly reflect the right recipient date of death).
or amounts. 2. The period, if any, from the end of the partnership's
tax year in (1) to the decedent's date of death.
For example, a Form 1099-INT, reporting interest paya-
ble to the decedent, may include income that should be Example. M. Smith was a partner in XYZ partnership
reported on the final income tax return of the decedent, as and reported the income on a tax year ending December
well as income that the estate or other recipient should re- 31. The partnership uses a tax year ending June 30. M.
port, either as income earned after death or as income in Smith died August 31, 2022, and the estate established its
respect of the decedent (discussed later). For income tax year through August 31.
earned after death, you should ask the payer for a Form The distributive share of partnership items based on
1099 that properly identifies the recipient (by name and the decedent's partnership interest is reported as follows.
identification number) and the proper amount. If that isn't
• Final Return for the Decedent—January 1 through Au-
possible, or if the form includes an amount that represents
gust 31, 2022, includes XYZ partnership items from
income in respect of the decedent, report the interest as
(a) the partnership tax year ending June 30, 2022; and
shown under How to report next.
(b) the partnership tax year beginning July 1, 2022,
and ending August 31, 2022 (the date of death).
See U.S. savings bonds acquired from decedent under
Specific Types of Income in Respect of a Decedent, later, • Income Tax Return of the Estate—September 1,
for information on savings bond interest that may have to 2022, through August 31, 2023, includes XYZ partner-
be reported on the final return. ship items for the period September 1, 2022, through
June 30, 2023.
How to report. If you are preparing the decedent's final
return and you have received a Form 1099-INT for the de- S Corporation Income
cedent that includes amounts belonging to the decedent
and to another recipient (the decedent's estate or another If the decedent was a shareholder in an S corporation, in-
beneficiary), report the total interest shown on Form clude on the final return the decedent's share of the S cor-
1099-INT on Schedule B (Form 1040), Interest and Ordi- poration's items of income, loss, deduction, and credit for
nary Dividends. Next, enter a subtotal of the interest the following periods.
shown on Forms 1099, and the interest reportable from
1. The corporation's tax year that ended within or with
other sources for which you didn't receive Forms 1099.
the decedent's final tax year (the year ending on the
Then, show any interest (including any interest you re-
date of death).
ceive as a nominee) belonging to another recipient sepa-
rately and subtract it from the subtotal. Identify the amount 2. The period, if any, from the end of the corporation's
of this adjustment as “Nominee Distribution” or other ap- tax year in (1) to the decedent's date of death.
propriate designation.
Report dividend income for which you received a Form
1099-DIV on the appropriate schedule using the same
procedure.

Publication 559 (2022) Page 7

- 8 -

Page 8 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Self-Employment Income For more information on Coverdell ESAs, see Pub.
970, Tax Benefits for Education.
Include self-employment income actually or constructively
received or accrued, depending on the decedent's ac- Accelerated Death Benefits
counting method. For self-employment tax purposes only,
the decedent's self-employment income will include the Accelerated death benefits are amounts received under a
decedent's distributive share of a partnership's income or life insurance contract before the death of the insured indi-
loss through the end of the month in which death occur- vidual. These benefits also include amounts received on
red. For this purpose, the partnership's income or loss is the sale or assignment of the contract to a viatical settle-
considered to be earned ratably over the partnership's tax ment provider.
year.
Generally, if the decedent received accelerated death
benefits on the life of a terminally or chronically ill individ-
Community Income
ual, whether on the decedent’s own life or on the life of an-
other person, those benefits aren't included in the dece-
If the decedent was married and domiciled in a community
dent's income. For more information, see the discussion
property state, half of the income received and half of the
under Gifts, Insurance, and Inheritances, under Other Tax
expenses paid during the decedent's tax year by either
Information, later.
the decedent or spouse may be considered to be the in-
come and expenses of the other. For more information,
see Pub. 555, Community Property. Deductions

Generally, the rules for deductions allowed to an individ-
HSA, Archer MSA, or Medicare Advantage
ual also apply to the decedent's final income tax return.
MSA Show on the final return deductible items the decedent
paid (or accrued, if the decedent reported deductions on
The treatment of an HSA (health savings account), an
an accrual method) before death. This section contains a
Archer MSA (medical savings account), or a Medicare Ad-
detailed discussion of medical expenses because the tax
vantage MSA at the death of the account holder depends
treatment of the decedent's medical expenses can be dif-
on who acquires the interest in the account. If the dece-
ferent. See Medical Expenses, later.
dent'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. The es- Standard Deduction

tate tax deduction, discussed later, doesn't apply to this If you don't itemize deductions on the final return, the full
amount. amount of the appropriate standard deduction is allowed
regardless of the date of death. For information on the ap-
If a beneficiary acquires the interest, see the discussion
propriate standard deduction, see the Form 1040 and
under Income in Respect of a Decedent, later. For other
1040-SR instructions or Pub. 501.
information on HSAs, Archer MSAs, or Medicare Advant-
age MSAs, see Pub. 969, Health Savings Accounts and
Other Tax-Favored Health Plans. Medical Expenses

Medical expenses paid before death by the decedent are
Coverdell Education Savings Account (ESA) deductible, subject to limits, on the final income tax return
if deductions are itemized. This includes expenses for the
Generally, the balance in a Coverdell ESA must be distrib- decedent, as well as for the decedent's spouse and de-
uted within 30 days after the individual for whom the ac- pendents.
count was established reaches age 30, or dies, whichever
is earlier. The treatment of the Coverdell ESA at the death Qualified medical expenses aren't deductible if
of an individual under age 30 depends on who acquires ! paid with a tax-free distribution from an HSA or an
the interest in the account. If the decedent's estate ac- CAUTION Archer MSA.
quires the interest, the earnings on the account must be
included on the final income tax return of the decedent. Election for decedent's expenses. Medical expenses
The estate tax deduction, discussed later, doesn't apply to not paid before death are liabilities of the estate and are
this amount. If a beneficiary acquires the interest, see the shown on the federal estate tax return (Form 706). How-
discussion under Income in Respect of a Decedent, later. ever, if medical expenses for the decedent are paid out of
the estate during the 1-year period beginning with the day
The age 30 limitation doesn't apply if the individual for after death, you can elect to treat all or part of the expen-
whom the account was established or the beneficiary that ses as paid by the decedent at the time they were incur-
acquires the account is an individual with special needs. red.
This includes an individual who, because of a physical, If you make the election, you can claim all or part of the
mental, or emotional condition (including a learning disa- expenses on the decedent's income tax return (if deduc-
bility), requires additional time to complete the individual’s tions are itemized) rather than on the federal estate tax re-
education. turn (Form 706). You can deduct expenses incurred in the

Page 8 Publication 559 (2022)

- 9 -

Page 9 of 51  Fileid: … tions/p559/2022/a/xml/cycle02/source                                        10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

year of death on the final income tax return. You should           Deduction for Losses
file an amended return (Form 1040-X) for medical expen-
ses incurred in an earlier year, unless the statutory period       A  decedent's  NOL  deduction  from  a  prior  year  and  any 
for filing a claim for that year has expired.                      capital  losses  (including  capital  loss  carryovers)  can  be 
The amount you can deduct on the income tax return is              deducted only on the decedent's final income tax return. 
the amount above 7.5% of AGI. Amounts not deductible               See Pub. 536. You can't deduct any unused NOL or capi-
because of this percentage can't be claimed on the fed-            tal loss on the estate's income tax return.
eral estate tax return.
                                                                   Note.    Generally,  an  NOL  arising  in  a  tax  year  begin-
Making  the  election.    You  make  the  election  by  at-        ning in 2021 or later may not be carried back and instead 
taching  a  statement,  in  duplicate,  to  the  decedent's  in-   must  be  carried  forward  indefinitely.  However,  farming 
come tax return or amended return. The statement must              losses arising in tax years beginning in 2021 or later may 
state that you haven't claimed the amount as an estate tax         be carried back 2 years and carried forward indefinitely.
deduction, and that the estate waives the right to claim the 
amount as a deduction. This election applies only to ex-           At-risk loss limits.  Special at-risk rules apply to most ac-
penses incurred for the decedent, not to expenses incur-           tivities that are engaged in as a trade or business or for 
red to provide medical care for dependents.                        the production of income.
                                                                   These rules limit the deductible loss to the amount for 
Example. R. Brown used the cash method of account-                 which the individual was considered at-risk in the activity. 
ing and filed the income tax return on a calendar year ba-         An individual will generally be considered at-risk to the ex-
sis. R. Brown died on June 1, 2022, at the age of 78, after        tent of the money and the adjusted basis of property that 
incurring $800 in medical expenses. Of that amount, $500           are  contributed  to  the  activity  and  certain  borrowed 
was incurred in 2021 and $300 was incurred in 2022. R.             amounts for use in the activity. An individual will be con-
Brown itemized the deductions when the 2021 income tax             sidered at-risk for amounts borrowed only if the individual 
return was filed. The personal representative of the estate        was personally liable for the repayment or if the amounts 
paid the entire $800 liability in August 2022.                     borrowed were secured by property other than that used 
The  personal  representative  may  file  an  amended  re-         in  the  activity.  The  individual  isn't  considered  at-risk  for 
turn  (Form  1040-X)  for  2021  claiming  the  $500  medical      borrowed amounts if the lender has an interest (other than 
expense  as  a  deduction,  subject  to  the  7.5%  limit.  The    as a creditor) in the activity or if the lender is related to a 
$300  of  expenses  incurred  in  2022  can  be  deducted  on      person  (other  than  the  taxpayer)  who  has  an  interest  in 
the final income tax return if deductions are itemized, sub-       the activity. For more information, see Pub. 925, Passive 
ject  to  the  7.5%  limit.  The  personal  representative  must   Activity and At-Risk Rules.
file a statement in duplicate with each return stating that 
these amounts have     not been claimed on the federal es-         Passive activity rules. A  passive activity is any trade or 
tate tax return (Form 706), and waiving the right to claim         business activity in which the taxpayer doesn't materially 
such a deduction on Form 706 in the future.                        participate. To determine material participation, see Pub. 
                                                                   925. Rental activities are passive activities regardless of 
Medical expenses not paid by estate.          If you paid med-     the  taxpayer's  participation,  unless  the  taxpayer  meets 
ical  expenses  for  your  deceased  spouse  or  dependent,        certain eligibility requirements.
claim the expenses on your tax return for the year in which        Individuals, estates, and trusts can offset passive activ-
you paid them, whether they are paid before or after the           ity  losses  only  against  passive  activity  income.  Passive 
decedent's death. If the decedent was a child of divorced          activity losses or credits not allowed in 1 tax year can be 
or  separated  parents,  the  medical  expenses  can  usually      carried forward to the next year.
be claimed by both the custodial parent and the noncusto-          If  a  passive  activity  interest  is  transferred  because  a 
dial  parent  to  the  extent  paid  by  that  parent  during  the taxpayer  dies,  the  accumulated  unused  passive  activity 
year.                                                              losses are allowed as a deduction against the decedent's 
                                                                   income in the year of death. Losses are allowed only to 
Insurance reimbursements. Insurance reimbursements 
                                                                   the extent they are greater than the excess of the transfer-
of previously deducted medical expenses due a decedent 
                                                                   ee's  (recipient  of  the  interest  transferred)  basis  in  the 
at the time of death and later received by the decedent's 
                                                                   property over the decedent's adjusted basis in the prop-
estate are includible in the income tax return of the estate 
                                                                   erty immediately before death. The part of the accumula-
(Form  1041)  for  the  year  the  reimbursements  are  re-
                                                                   ted losses equal to the excess isn't allowed as a deduc-
ceived. The reimbursements are also includible in the de-
                                                                   tion for any tax year.
cedent's gross estate.
                                                                   Use  Form  8582,  Passive  Activity  Loss  Limitations,  to 
        No deduction for funeral expenses can be taken             summarize losses and income from passive activities and 
!       on the final Form 1040 or 1040-SR of a decedent.           to figure the amounts allowed. For more information, see 
CAUTION These expenses may be deductible for estate tax            Pub. 925.
purposes on Form 706.
                                                                   Credits, Other Taxes, and Payments

                                                                   Discussed  below  are  some  of  the  tax  credits,  types  of 
                                                                   taxes  that  may  be  owed,  income  tax  withheld,  and 

Publication 559 (2022)                                                                                            Page 9

- 10 -

Page 10 of 51        Fileid: … tions/p559/2022/a/xml/cycle02/source                               10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

estimated tax payments reported on the final return of a           Other Taxes
decedent.
                                                                   Taxes other than income tax that may be owed on the fi-
Credits                                                            nal return of a decedent include self-employment tax and 
                                                                   alternative  minimum  tax,  which  are  reported  on  Form 
On the final income tax return, you can claim any tax cred-        1040 or 1040-SR.
its  that  applied  to  the  decedent  before  death.  Some  of 
these credits are discussed next.                                  Self-employment  tax. Self-employment  tax  may  be 
                                                                   owed on the final return if either of the following applied to 
Earned  income  credit. If  the  decedent  was  an  eligible       the decedent in the year of death.
individual, you can claim the earned income credit on the 
decedent's final return even though the return covers less         1. Net earnings from self-employment (excluding in-
than 12 months. If the allowable credit is more than the tax       come described in (2)) were $400 or more.
liability for the year, the excess is refunded.                    2. Wages from services performed as a church em-
For  more  information,  see  Pub.  596,  Earned  Income           ployee were $108.28 or more.
Credit (EIC).
                                                                   Alternative minimum tax (AMT).      The tax laws give spe-
Credit for the elderly or the disabled. This credit is al-         cial treatment to certain types of income and allow special 
lowable on a decedent's final income tax return if the de-         deductions and credits for certain types of expenses. The 
cedent met both of the following requirements in the year          AMT  was  enacted  so  taxpayers  who  benefit  from  these 
of death.                                                          laws still pay at least a minimum amount of tax. In general, 
• The decedent was a “qualified individual.”                       the AMT is the excess of the tentative minimum tax over 
                                                                   the regular tax shown on the return.
• The decedent had income (AGI and nontaxable social 
  security and pensions) less than certain limits.                 Form  6251. Use  Form  6251,  Alternative  Minimum 
                                                                   Tax—Individuals, to determine if this tax applies to the de-
For  details  on  qualifying  for  or  figuring  the  credit,  see 
                                                                   cedent. See the form instructions for information on when 
Pub. 524, Credit for the Elderly or the Disabled.
                                                                   you must attach Form 6251 to Form 1040 or 1040-SR.
Child tax credit. If the decedent had a qualifying child,          Form  8801. If  the  decedent  paid  AMT  in  a  previous 
you may be able to claim the child tax credit on the dece-         year or had a credit carryforward, the decedent may be el-
dent's final return even though the return covers less than        igible for a minimum tax credit. See Form 8801, Credit for 
12 months. You may be able to claim the additional child           Prior  Year  Minimum  Tax—Individuals,  Estates,  and 
tax credit and get a refund if the credit is more than the de-     Trusts.
cedent's  liability.  For  more  information,  see  the  Instruc-
tions for Form 1040.
                                                                   Payments of Tax
Adoption  credit. Depending  upon  when  the  adoption 
was finalized, this credit may be taken on a decedent's fi-        The income tax withheld from the decedent's salary, wa-
nal income tax return if either of the following applies.          ges, pensions, or annuities, and the amount paid as esti-
                                                                   mated tax are credits (advance payments of tax) that must 
• The decedent adopted an eligible child and paid quali-           be claimed on the final return.
  fied adoption expenses.
• The decedent has a carryforward of an adoption credit            Tax Forgiveness for Armed Forces 
  from a prior year.
                                                                   Members, Victims of Terrorism, and 
Also,  if  the  decedent  is  survived  by  a  spouse  who 
                                                                   Astronauts
meets the filing status of qualifying surviving spouse, un-
used adoption credit may be carried forward and used fol-
                                                                   Income  tax  liability  may  be  forgiven  for  a  decedent  who 
lowing the death of the decedent. See Form 8839, Quali-
                                                                   dies  due  to  service  in  a  combat  zone,  due  to  military  or 
fied  Adoption  Expenses,  and  its  instructions  for  more 
                                                                   terrorist actions, as a result of a terrorist attack, or while 
details.
                                                                   serving in the line of duty as an astronaut.
General  business  tax  credit.   The  general  business 
credit available to a taxpayer is limited. Any unused credit       Combat Zone
arising in a tax year beginning after 1997 has a 1-year car-
ryback and a 20-year carryforward period.                          If a member of the Armed Forces of the United States dies 
After  the  carryforward  period,  a  deduction  may  be  al-      while in active service in a combat zone or from wounds, 
lowed for any unused business credit. If the taxpayer dies         disease,  or  injury  incurred  in  a  combat  zone,  the  dece-
before the end of the carryforward period, the deduction is        dent's income tax liability is abated (forgiven) for the entire 
generally allowed in the year of death.                            year  in  which  death  occurred  and  for  any  prior  tax  year 
For  more  information  on  the  general  business  credit,        ending  on  or  after  the  first  day  the  person  served  in  a 
see Pub. 334, Tax Guide for Small Business.                        combat zone in active service. For this purpose, a quali-
                                                                   fied hazardous duty area is treated as a combat zone.

Page 10                                                                                              Publication 559 (2022)

- 11 -

Page 11 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

If the tax (including interest, additions to the tax, and Determining if a terrorist activity or military action
additional amounts) for these years has been assessed, has occurred. You may rely on published guidance from
the assessment will be forgiven. If the tax has been collec- the IRS to determine if a particular event is considered a
ted (regardless of the date of collection), that tax will be terrorist activity or military action.
credited or refunded.
Specified Terrorist Victim
Any of the decedent's income tax for tax years before
those mentioned above that remains unpaid as of the ac- The Victims of Terrorism Tax Relief Act of 2001 (the Act)
tual (or presumptive) date of death won't be assessed. If provides tax relief for those injured or killed as a result of
any unpaid tax (including interest, additions to the tax, and terrorist attacks, certain survivors of those killed as a re-
additional amounts) has been assessed, this assessment sult of terrorist attacks, and others who were affected by
will be forgiven. Also, if any tax was collected after the terrorist attacks. Under the Act, the federal income tax lia-
date of death, that amount will be credited or refunded. bility of those killed in the following attacks (specified ter-
rorist victim) is forgiven for certain tax years.
The date of death of a member of the Armed Forces re-
ported as missing in action or as a prisoner of war is the • The April 19, 1995, terrorist attack on the Alfred P.
Murrah Federal Building (Oklahoma City).
date the member’s name is removed from missing status
for military pay purposes. This is true even if death ac- • The September 11, 2001, terrorist attacks.
tually occurred earlier. The terrorist attacks involving anthrax occurring after
•
September 10, 2001, and before January 1, 2002.
For other tax information for members of the Armed
Forces, see Pub. 3, Armed Forces' Tax Guide. The Act also exempts from federal income tax the fol-
lowing types of income.
Military or Terrorist Actions
• Qualified disaster relief payments made after Septem-
The decedent's income tax liability is forgiven if, at death, ber 10, 2001, to cover personal, family, living, or fu-
the decedent was a military or civilian employee of the neral expenses incurred because of a terrorist attack.
United States who died because of wounds or injury incur- • Certain disability payments (including Social Security
red: Disability Insurance (SSDI) payments) received in tax
• While a U.S. employee, and years ending after September 10, 2001, for injuries
sustained in a terrorist attack.
• In a military or terrorist action.
• Certain death benefits paid by an employer to the sur-
The forgiveness applies to the tax year in which death vivor of an employee because the employee died as a
occurred and for any earlier tax year, beginning with the result of a terrorist attack.
year before the year in which the wounds or injury occur- • Payments from the September 11th Victim Compen-
red. sation Fund 2001.

Example. The income tax liability of a civilian em- The Act also reduces the estate tax of individuals who
ployee of the United States who died in 2022 because of die as a result of a terrorist attack. See Pub. 3920, Tax
wounds incurred while a U.S. employee in a terrorist at- Relief for Victims of Terrorist Attacks for more information.
tack that occurred in 2016 will be forgiven for 2022 and for
all prior tax years in the period 2015 through 2021. Re- Astronauts
funds are allowed for the tax years for which the period for
filing a claim for refund hasn't ended, as discussed later. Legislation extended the tax relief available under the Vic-
tims of Terrorism Tax Relief Act of 2001 (the Act) to astro-
Military or terrorist action defined. A military or terro- nauts who died in the line of duty after December 31,
rist action means the following. 2002. The decedent's income tax liability is forgiven for
• Any terrorist activity that most of the evidence indi- the tax year in which death occurs, and for the tax year
cates was directed against the United States or any of prior to death. For information on death benefit payments
its allies. and the reduction of federal estate taxes, see Pub. 3920.
However, the discussions in that publication under Death
• Any military action involving the U.S. Armed Forces
Benefits and Estate Tax Reduction should be modified for
and resulting from violence or aggression against the
astronauts (for example, by using the date of death of the
United States or any of its allies, or the threat of such
astronaut instead of September 11, 2001).
violence or aggression.
Terrorist activity includes criminal offenses intended to For more information on the Act, see Pub. 3920.
coerce, intimidate, or retaliate against the government or
civilian population. Military action doesn't include training Claim for Credit or Refund
exercises. Any multinational force in which the United
States is participating is treated as an ally of the United If any of these tax-forgiveness situations applies to a prior
States. year tax, any tax paid for which the period for filing a claim

Publication 559 (2022) Page 11

- 12 -

Page 12 of 51          Fileid: … tions/p559/2022/a/xml/cycle02/source                              10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

hasn't ended will be credited or refunded. If any tax is still        You  must  also  attach  proof  of  death  that  includes  a 
due,  it  will  be  canceled.  The  normal  period  for  filing  a    statement that the individual was a U.S. employee on the 
claim  for  credit  or  refund  is  3  years  after  the  return  was date of injury and on the date of death and died as the re-
filed or 2 years after the tax was paid, whichever is later.          sult of a military or terrorist action. For military and civilian 
                                                                      employees  of  the  Department  of  Defense,  attach  DD 
If  death  occurred  in  a  combat  zone  or  from  wounds,           Form 1300, Report of Casualty. For other U.S. civilian em-
disease, or injury incurred in a combat zone, the period for          ployees killed in the United States, attach a death certifi-
filing the claim is extended by:                                      cate and a certification (letter) from the federal employer. 
1. The amount of time served in the combat zone (in-                  For other U.S. civilian employees killed overseas, attach a 
  cluding any period in which the individual was in miss-             certification from the Department of State.
  ing status), plus                                                   If you don't have enough tax information to file a timely 
                                                                      claim  for  refund,  you  can  suspend  the  period  for  filing  a 
2. The period of continuous qualified hospitalization for             claim  by  filing  Form  1040-X.  Attach  Form  1310,  any  re-
  injury from service in the combat zone, if any, plus                quired documentation currently available, and a statement 
3. The next 180 days.                                                 that you will file an amended claim as soon as you have 
                                                                      the required tax information.
Qualified  hospitalization  means  any  hospitalization  out-
side the United States and any hospitalization in the Uni-            Joint returns. If a joint return was filed, only the dece-
ted States of not more than 5 years.                                  dent's part of the income tax liability is eligible for forgive-
                                                                      ness. Determine the decedent's tax liability as follows.
This extended period for filing the claim also applies to             1. Figure the income tax for which the decedent would 
a  member  of  the  Armed  Forces  who  was  deployed  out-           have been liable if a separate return had been filed.
side the United States in a designated contingency opera-
tion.                                                                 2. Figure the income tax for which the spouse would 
                                                                      have been liable if a separate return had been filed.
Filing  a  claim. Use  the  following  procedures  to  file  a 
claim.                                                                3. Multiply the joint tax liability by a fraction. The numer-
                                                                      ator of the fraction is the amount in (1) above. The de-
• If a U.S. individual income tax return (Form 1040 or                nominator of the fraction is the total of (1) and (2).
  1040-SR) hasn't been filed, you should make a claim 
  for refund of any withheld income tax or estimated tax              The resulting amount from (3) above is the decedent's 
  payments by filing Form 1040 or 1040-SR. Form W-2                   tax liability eligible for forgiveness. See also Worksheet B 
  must accompany all returns.                                         in Pub. 3920.
• If a U.S. individual income tax return has been filed, 
  you should make a claim for refund by filing Form                   Filing Reminders
  1040-X. You must file a separate Form 1040-X for 
                                                                      To minimize the time needed to process the decedent's fi-
  each year in question.
                                                                      nal  return  and  issue  any  refund,  be  sure  to  follow  these 
You must file these returns and claims at the following               procedures.
address for regular mail (U.S. Postal Service).
                                                                      1. Write “DECEASED,” the decedent's name, and the 
       Internal Revenue Service                                       date of death across the top of the tax return.
       333 W. Pershing, Stop 6503, P5
       Kansas City, MO 64108                                          2. If a personal representative has been appointed, the 
                                                                      personal representative must sign the return. If it is a 
Identify all returns and claims for refund by writing “Iraqi          joint return, the surviving spouse must also sign it.
Freedom—KIA,” “Enduring Freedom—KIA,” “Kosovo Op-
eration—KIA,” “Desert Storm—KIA,” or “Former Yugosla-                 3. If you are the decedent's spouse filing a joint return 
via—KIA” in bold letters on the top of page 1 of the return           with the decedent and no personal representative has 
or claim. On the applicable return, write the same phrase             been appointed, write “Filing as surviving spouse” in 
on the line for total tax. If the individual was killed in a ter-     the area where you sign the return.
rorist or military action, put “KITA” on the front of the return 
                                                                      4. If no personal representative has been appointed and 
and on the line for total tax.
                                                                      if there is no surviving spouse, the person in charge of 
Include an attachment showing the computation of the 
                                                                      the decedent's property must file and sign the return 
decedent's tax liability and a computation of the amount to 
                                                                      as “personal representative.”
be forgiven. On joint returns, make an allocation of the tax 
as described later under Joint returns. If you can't make a           5. To claim a refund for the decedent, do the following.
proper allocation, attach a statement of all income and de-
                                                                      a. If you are the decedent's spouse filing a joint re-
ductions allocable to each spouse and the IRS will make 
                                                                      turn with the decedent, file only the tax return to 
the proper allocation.
                                                                      claim the refund.
You must attach Form 1310 to all returns and claims for 
refund. However, for exceptions to filing Form 1310, see              b. If you are the personal representative and the re-
Form 1310, Statement of Person Claiming Refund Due a                  turn isn't a joint return filed with the decedent's 
Deceased Taxpayer, under Refund, earlier.                             surviving spouse, file the return and attach a copy 

Page 12                                                                                            Publication 559 (2022)

- 13 -

Page 13 of 51  Fileid: … tions/p559/2022/a/xml/cycle02/source                                    10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

        of the certificate that shows your appointment by           child for the entire year except for temporary absen-
        the court. (A power of attorney or a copy of the de-        ces.
        cedent's will isn't acceptable evidence of your ap-
        pointment as the personal representative.) If you         Example.     Skyler’s  spouse,  Cameron,  died  in  2020. 
        are filing an amended return, attach Form 1310            Skyler  hasn't  remarried  and  continued  throughout  2021 
        and a copy of the certificate of appointment (or, if      and 2022 to maintain a home for self and dependent child. 
        you have already sent the certificate of appoint-         For 2020, Skyler was entitled to file a joint return with Ca-
        ment to the IRS, write “Certificate Previously Filed”     meron.  For  2021  and  2022,  Skyler  qualifies  to  file  as  a 
        at the bottom of Form 1310).                              qualifying surviving spouse with dependent child. For later 
                                                                  years, Skyler may qualify to file as head of household.
  c. If you aren't filing a joint return as the surviving 
        spouse and a personal representative hasn't been          Figuring  your  tax.      Check  the  qualifying  surviving 
        appointed, file the return and attach Form 1310.          spouse box on the top of your Form 1040 or 1040-SR tax 
                                                                  return. In the Instructions for Form 1040 (and 1040-SR), 
                                                                  use the married filing jointly column in the Tax Table.
                                                                  The  last  year  you  can  file  jointly  with  your  deceased 
Other Tax Information                                             spouse is the year of death.

Discussed below is information about the effect of an indi-       Joint return filing rules. If you are the surviving spouse 
vidual's death on the income tax liability of the survivors       and  a  personal  representative  is  handling  the  estate  for 
(including the surviving spouse), the beneficiaries, and the      the decedent, you should coordinate filing your return for 
estate.                                                           the  year  of  death  with  this  personal  representative.  See 
                                                                  Joint  Return  under Final  Income  Tax  Return  for  Dece-
Tax Benefits for Survivors                                        dent—Form 1040 or 1040-SR, earlier.

Survivors can qualify for certain benefits when filing their      Income in Respect of a Decedent
own income tax returns.
Joint return by surviving spouse.    A surviving spouse           All income the decedent would have received had death 
can file a joint return for the year of death and may qualify     not occurred that wasn't properly includible on the final re-
for special tax rates for the following 2 years, as explained     turn, discussed earlier, is income in respect of a decedent.
under Qualifying surviving spouse, later.                                  If the decedent is a specified terrorist victim (see 
                                                                           Specified  Terrorist  Victim,  earlier),  income  re-
Decedent as your dependent.  If the decedent qualified            CAUTION! ceived after the date of death and before the end 
as your dependent for a part of the year before death, you        of the decedent's tax year (determined without regard to 
can claim the dependent on your tax return, regardless of         death) is excluded from the recipient's gross income. This 
when death occurred during the year.                              exclusion doesn't apply to certain income. For more infor-
If the decedent was your qualifying child, you may be             mation, see Pub. 3920.
able  to  claim  the  child  tax  credit  or  the  earned  income 
credit. To determine if you qualify for the child tax credit, 
see the instructions for Form 1040 and 1040-SR, line 19;          How To Report
or Form 1040-NR, line 19. To determine if you qualify for 
the  earned  income  credit,  see  the  instructions  for  Form   Income in respect of a decedent must be included in the 
1040 and 1040-SR, line 27.                                        income of one of the following.
Qualifying surviving spouse. If your spouse died within           • The decedent's estate, if the estate receives it.
the 2 tax years preceding the year for which your return is       • The beneficiary, if the right to income is passed di-
being filed, you may be eligible to claim the filing status of      rectly to the beneficiary and the beneficiary receives it.
qualifying  surviving  spouse  with  dependent  child  and 
qualify to use the married-filing-jointly tax rates.              • Any person to whom the estate properly distributes 
                                                                    the right to receive it.
Requirements. Generally, you qualify for this special                      If you have to include income in respect of a de-
benefit if you meet all of the following requirements.            TIP      cedent in your gross income and an estate tax re-
• You were entitled to file a joint return with your spouse                turn  (Form  706)  was  filed  for  the  decedent,  you 
  for the year of death—whether or not you actually filed         may be able to claim a deduction for the estate tax paid on 
  jointly.                                                        that income. See Estate Tax Deduction, later.
• You didn't remarry before the end of the current tax 
  year.                                                           Example 1.   F. Johnson owned and operated an apple 
                                                                  orchard  and  used  the  cash  method  of  accounting.  F. 
• You have a child, stepchild, or foster child who quali-         Johnson sold and delivered 1,000 bushels of apples to a 
  fies as your dependent for the tax year.                        canning factory for $2,000, but didn't receive payment be-
• You provide more than half the cost of maintaining              fore death. The proceeds from the sale are income in re-
  your home, which is the principal residence of that             spect  of  a  decedent.  When  the  estate  was  settled, 

Publication 559 (2022)                                                                                     Page 13

- 14 -

Page 14 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

payment had not been made and the estate transferred If you make a gift of such a right, you must include in
the right to the payment to F. Johnson’s surviving spouse. your income the FMV of the right at the time of the gift.
When the surviving spouse collects the $2,000, that If the right to income from an installment obligation is
amount must be included in the surviving spouse’s return. transferred, the amount you must include in income is re-
It isn't reported on the final return of the decedent or on duced by the basis of the obligation. See Installment obli-
the return of the estate. gations, later.
Example 2. Assume the same facts as in Example 1, Transfer defined. A transfer for this purpose includes
except that F. Johnson used the accrual method of ac- a sale, exchange, or other disposition, the satisfaction of
counting. The amount accrued from the sale of the apples an installment obligation at other than face value, or the
would be included on F. Johnson’s final return. Neither the cancellation of an installment obligation.
estate nor the surviving spouse would realize income in
Installment obligations. If the decedent sold property
respect of a decedent when the money is later paid.
using the installment method and you are collecting pay-
Example 3. On February 1, G. High, a cash method ments on an installment obligation acquired from the de-
taxpayer, sold a tractor for $3,000, payable March 1 of the cedent, use the same gross profit percentage the dece-
same year. G. High’s adjusted basis in the tractor was dent used to figure the part of each payment that
$2,000. G. High died on February 15, before receiving represents profit. Include in your income the same profit
payment. The gain to be reported as income in respect of the decedent would have included had death not occur-
a decedent is the $1,000 difference between the dece- red. For more information, see Pub. 537, Installment
dent's basis in the property and the sale proceeds. In Sales.
other words, the income in respect of a decedent is the If you dispose of an installment obligation acquired
gain the decedent would have realized had the decedent from a decedent (other than by transfer to the obligor), the
lived. rules explained in Pub. 537 for figuring gain or loss on the
disposition apply to you.
Example 4. C. O'Neil was entitled to a large salary
Transfer to obligor. A transfer of a right to income,
payment at the date of death. The amount was to be paid
discussed earlier, has occurred if the decedent (seller)
in five annual installments. The estate, after collecting two
sold property using the installment method and the install-
installments, distributed the right to the remaining install-
ment obligation was transferred to the obligor (buyer or
ments to you, the beneficiary. The payments are income
person legally obligated to pay the installments). A trans-
in respect of a decedent. None of the payments were in-
fer also occurs if the obligation was canceled either at
cludible on C. O’Neil's final return. The estate must in-
death or by the estate or person receiving the obligation
clude in its income the two installments it received, and
from the decedent. An obligation that becomes unen-
you must include in your income each of the three install-
forceable is treated as having been canceled.
ments as you receive them.
If such a transfer occurs, the amount included in the in-
Example 5. Danny inherited the right to receive re- come of the transferor (the estate or beneficiary) is the
newal commissions on life insurance sold by Danny’s pa- greater of the amount received or the FMV of the install-
rent, Taylor, before Taylor’s death. Danny inherited the ment obligation at the time of transfer, reduced by the ba-
right from Danny’s other parent, Charlie, who acquired it sis of the obligation. The basis of the obligation is the de-
by bequest from Taylor. Charlie died before receiving all cedent's basis, adjusted for all installment payments
the commissions Charlie had the right to receive, so received after the decedent's death and before the trans-
Danny received the rest. The commissions are income in fer.
respect of a decedent. None of these commissions were If the decedent and obligor were related persons, the
includible in Taylor’s final return. The commissions re- FMV of the obligation can't be less than its face value.
ceived by Charlie were included in Charlie’s income. The
commissions Danny received aren't includible in Charlie’s Specific Types of Income in Respect of a
income, even on Charlie’s final return. Danny must include Decedent
them in Danny’s income.
This section explains and provides examples of some
Character of income. The character of the income you specific types of income in respect of a decedent.
receive in respect of a decedent remains the same as it
would have been to the decedent if the decedent were Wages. The entire amount of wages or other employee
alive. If the income would have been a capital gain to the compensation earned by the decedent but unpaid at the
decedent, it will be a capital gain to you. time of death is income in respect of a decedent. The in-
come isn't reduced by any amounts withheld by the em-
Transfer of right to income. If you transfer your right to ployer. If the income is $600 or more, the employer should
income in respect of a decedent, you must include in your report it in box 3 of Form 1099-MISC, Miscellaneous In-
income the greater of: come, and give the recipient a copy of the form or a simi-
lar statement.
• The amount you receive for the right, or
Wages paid as income in respect of a decedent aren't
• The FMV of the right you transfer. subject to federal income tax withholding. However, if paid

Page 14 Publication 559 (2022)

- 15 -

Page 15 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

during the calendar year of death, they are subject to with- of death, the increase in value of the bonds (interest
holding for social security and Medicare taxes. These earned) in the year of death up to the date of death must
taxes should be included on the decedent's Form W-2 be reported on the decedent's final return. The transferee
along with the taxes withheld before death. These wages (estate or beneficiary) reports on its return only the inter-
aren't included in box 1 of Form W-2. est earned after the date of death.
Wages paid as income in respect of a decedent after The redemption values of U.S. savings bonds are gen-
the year of death aren’t generally subject to withholding erally available from local banks, credit unions, savings
for any federal taxes. and loan institutions, or your nearest Federal Reserve
Bank.
Farm income from crops, crop shares, and livestock. You can also get information by writing to the following
A farmer's growing crops and livestock at the date of address.
death wouldn’t normally give rise to income in respect of a
decedent or income to be included in the final return. Series EE and Series I
However, when a cash method farmer receives rent in the Treasury Retail Securities Services
form of crop shares or livestock and owns the crop shares P.O. Box 9150
or livestock at the time of death, the rent is income in re- Minneapolis, MN 55480-9150
spect of a decedent and is reported in the year in which
Or go to TreasuryDirect.gov.
the crop shares or livestock are sold or otherwise dis-
posed of. The same treatment applies to crop shares or
livestock that the decedent had a right to receive as rent at
the time of death for economic activities that occurred be- If the bonds transferred because of death were owned
fore death. by a cash method taxpayer who chose not to report the in-
If the individual died during a rental period, only the net terest each year and had purchased the bonds entirely
proceeds from the part of the rental period ending on the with personal funds, interest earned before death must be
date of death are income in respect of a decedent. The reported in one of the following ways.
proceeds from the rental period from the day after death 1. The person (executor, administrator, etc.) who is re-
to the end of the rental period are ordinary income to the quired to file the decedent's final income tax return
estate. Cash rent or crop shares and livestock received as can elect to include all of the interest earned on the
rent and reduced to cash by the decedent are includible bonds before the decedent's death on the return. The
on the final return even though the rental period didn't end transferee (estate or beneficiary) then includes only
until after death. the interest earned after the date of death on its re-
turn.
Example. A. Roberts, who used the cash method of
accounting, leased part of the farm for a 1-year period be- 2. If the election in (1) above wasn't made, the interest
ginning March 1. The rental was one-third of the crop, earned to the date of death is income in respect of the
payable in cash when the crop share is sold at the direc- decedent and isn't included on the decedent's final re-
tion of A. Roberts. A. Roberts died on June 30 and was turn. In this case, all of the interest earned before and
alive during 122 days of the rental period. Seven months after the decedent's death is income to the transferee
later, A. Roberts' personal representative ordered the crop (estate or beneficiary). A transferee who uses the
to be sold and was paid $1,500. Of the $1,500, 122/365, cash method of accounting and who has chosen not
or $501, is income in respect of a decedent. The balance to report the interest annually may defer reporting any
of the $1,500 received by the estate, $999, is income to of it as income until the bonds are either cashed or
the estate. reach the date of maturity, whichever is earlier. In the
year the interest is reported, the transferee may claim
Partnership income. If the decedent had been receiving a deduction for any federal estate tax paid that arose
payments representing a distributive share or guaranteed because of the part of interest (if any) included in the
payment in liquidation of the decedent’s interest in a part- decedent's estate.
nership, the remaining payments made to the estate or
other successor in interest are income in respect of a de- Example 1. Your relative, Drew, a cash method tax-
cedent. The estate or the successor receiving the pay- payer, died and left you a $1,000 series EE bond. Drew
ments must include them in income when received. Simi- bought the bond for $500 and had not chosen to report
larly, the estate or other successor in interest receives the increase in value each year. At the date of death, in-
income in respect of a decedent if amounts are paid by a terest of $94 had accrued on the bond, and its value of
third person in exchange for the successor's right to the $594 at date of death was included in Drew's estate.
future payments. Drew's personal representative didn't choose to include
For a discussion of partnership rules, see Pub. 541, the $94 accrued interest on the decedent's final income
Partnerships. tax return. You are a cash method taxpayer and don't
choose to report the increase in value each year as it is
U.S. savings bonds acquired from decedent. If series earned. Assuming you cash it when it reaches maturity
EE or series I U.S. savings bonds, owned by a cash value of $1,000, you would report $500 interest income
method taxpayer who reported the interest each year, or (the difference between maturity value of $1,000 and the
by an accrual method taxpayer, are transferred because original cost of $500) in that year. You are also entitled to

Publication 559 (2022) Page 15

- 16 -

Page 16 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

claim, in that year, a deduction for any federal estate tax tate taxes that wasn't received as of the date of the indi-
resulting from the inclusion in Drew’s estate of the $94 in- vidual's death is income in respect of a decedent. This in-
crease in value. terest isn't included in the decedent's final income tax
return. The estate will treat such interest as taxable in-
Example 2. If, in Example 1, the personal representa- come in the tax year received if it chooses to redeem the
tive had chosen to include the $94 interest earned on the U.S. Treasury bonds to pay federal estate taxes. If the
bond before death in the final income tax return for Drew, person entitled to the bonds (by bequest, devise, or inheri-
you would report $406 ($500 − $94) as interest when you tance, or because of the death of the individual) receives
cashed the bond at maturity. This $406 represents the in- them, that person will treat the accrued interest as taxable
terest earned after Drew's death and wasn't included in income in the year the interest is received. Interest that
Drew’s estate, so no deduction for federal estate tax is al- accrues on the U.S. Treasury bonds after the owner's
lowable for this amount. death doesn't represent income in respect of a decedent.
The interest, however, is taxable income and must be in-
Example 3. Drew died owning series HH bonds Drew
cluded in the income of the respective recipients.
acquired in exchange for series EE bonds. You were the
beneficiary of these bonds. Drew used the cash method of Interest accrued on savings certificates. The interest
accounting and had not chosen to report the increase in accrued on savings certificates (redeemable after death
redemption price of the series EE bonds each year as it without forfeiture of interest) for the period from the date of
accrued. Drew's personal representative made no elec- the last interest payment and ending with the date of the
tion to include any interest earned before death on the de- decedent's death, but not received as of that date, is in-
cedent's final return. Your income in respect of the dece- come in respect of a decedent. Interest accrued after the
dent is the sum of the unreported increase in value of the decedent's death that becomes payable on the certifi-
series EE bonds, which constituted part of the amount cates after death isn't income in respect of a decedent,
paid for the series HH bonds, and the interest, if any, pay- but is taxable income includible in the income of the re-
able on the series HH bonds but not received as of the spective recipients.
date of the decedent's death.
Inherited individual retirement arrangements (IRAs).
Specific dollar amount legacy satisfied by transfer
If a beneficiary receives a lump-sum distribution from a
of bonds. If a beneficiary receives series EE or series I
traditional IRA the beneficiary inherited, all or some of it
bonds from an estate in satisfaction of a specific dollar
may be taxable. The distribution is taxable in the year re-
amount legacy and the decedent was a cash method tax-
ceived as income in respect of a decedent up to the dece-
payer who didn't elect to report interest each year, only
dent's taxable balance. This is the decedent's balance at
the interest earned after receipt of the bonds is income to
the time of death, including unrealized appreciation and
the beneficiary. The interest earned to the date of death
income accrued to date of death, minus any basis (nonde-
plus any further interest earned to the date of distribution
ductible contributions). Amounts distributed that are more
is income to (and reportable by) the estate.
than the decedent's entire IRA balance (includes taxable
Cashing U.S. savings bonds. When you cash a U.S. and nontaxable amounts) at the time of death are the in-
savings bond that you acquired from a decedent, the bank come of the beneficiary.
or other payer that redeems it must give you a Form If the beneficiary of a traditional IRA is the decedent's
1099-INT if the interest part of the payment you receive is surviving spouse who properly rolls over the distribution
$10 or more. Your Form 1099-INT should show the differ- into another traditional IRA, the distribution isn't currently
ence between the amount received and the cost of the taxed. A surviving spouse can also roll over tax free the
bond. The interest shown on your Form 1099-INT won't taxable part of the distribution into a qualified plan, section
be reduced by any interest reported by the decedent be- 403 annuity, or section 457 plan.
fore death, or, if elected, by the personal representative For more information on inherited IRAs, see Pub.
on the final income tax return of the decedent, or by the 590-B, Distributions from Individual Retirement Arrange-
estate on the estate's income tax return. Your Form ments (IRAs).
1099-INT may show more interest than you must include
in your income. Roth IRAs. Qualified distributions from a Roth IRA aren't
You must make an adjustment on your tax return to re- subject to tax. A distribution made to a beneficiary or to
port the correct amount of interest. Report the total inter- the Roth IRA owner's estate on or after the date of death
est shown on Form 1099-INT on your Schedule B (Form is a qualified distribution if it is made after the 5-tax-year
1040). Enter a subtotal of the interest shown on Forms period beginning with the first tax year in which a contribu-
1099, and the interest reportable from other sources for tion was made to any Roth IRA of the owner.
which you didn't receive Forms 1099. Show the total inter- Generally, the entire interest in the Roth IRA must be
est that was previously reported and subtract it from the distributed by the end of the fifth calendar year after the
subtotal. Identify this adjustment as “U.S. Savings Bond year of the owner's death unless the interest is payable to
Interest Previously Reported.” a designated beneficiary over the beneficiary’s life or life
expectancy. If paid as an annuity, the distributions must
Interest accrued on U.S. Treasury bonds. The interest begin before the end of the calendar year following the
accrued on U.S. Treasury bonds owned by a cash method year of death. If the sole beneficiary is the decedent's
taxpayer and redeemable for the payment of federal es- spouse, the spouse can delay the distributions until the

Page 16 Publication 559 (2022)

- 17 -

Page 17 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

decedent would have reached age 70 / or can treat the 1 2 medical expenses for the decedent paid by the benefi-
Roth IRA as the spouse’s own Roth IRA. ciary within 1 year after the decedent's date of death. An
The part of any distribution made to a beneficiary that estate tax deduction, discussed later, applies to the
isn't a qualified distribution may be includible in the benefi- amount included in income by a beneficiary other than the
ciary's income. Generally, the part includible is the earn- decedent's spouse.
ings in the Roth IRA. Earnings attributable to the period
ending with the decedent's date of death are income in re- Deductions in Respect of a Decedent
spect of a decedent. Additional earnings are the income
of the beneficiary. Items such as business expenses, income-producing ex-
For more information on Roth IRAs, see Pub. 590-A, penses, interest, and taxes, for which the decedent was li-
Contributions to Individual Retirement Arrangements able but that aren't properly allowable as deductions on
(IRAs), and Pub. 590-B. the decedent's final income tax return will be allowed as a
Coverdell ESA. Generally, the balance in a Coverdell deduction to one of the following when paid.
ESA must be distributed within 30 days after the individual • The estate.
for whom the account was established reaches age 30 or
• The person who acquired an interest in the decedent's
dies, whichever is earlier. The treatment of the Coverdell
property (subject to such obligations) because of the
ESA at the death of an individual under age 30 depends
decedent's death, if the estate wasn't liable for the ob-
on who acquires the interest in the account. If the dece-
ligation.
dent's estate acquires the interest, see the discussion un-
der Final Income Tax Return for Decedent—Form 1040 or Note. Similar treatment is given to the foreign tax
1040-SR, earlier. credit. A beneficiary who must pay a foreign tax on in-
The age 30 limitation doesn't apply if the individ- come in respect of a decedent will be entitled to claim the
foreign tax credit.
! ual for whom the account was established or the
CAUTION beneficiary that acquires the account is an individ-
ual with special needs. This includes an individual who, Depletion. The deduction for percentage depletion is al-
because of a physical, mental, or emotional condition (in- lowable only to the person (estate or beneficiary) who re-
cluding a learning disability), requires additional time to ceives income in respect of a decedent to which the de-
complete the individual’s education. duction relates, whether or not that person receives the
property from which the income is derived. An heir who
If the decedent's spouse or other family member is the (because of the decedent's death) receives income as a
designated beneficiary of the decedent's account, the result of the sale of units of mineral by the decedent (who
Coverdell ESA becomes that person's Coverdell ESA. It is used the cash method) will be entitled to the depletion al-
subject to the rules discussed in Pub. 970. lowance for that income. If the decedent had not figured
Any other beneficiary (including a spouse or family the deduction on the basis of percentage depletion, any
member who isn't the designated beneficiary) must in- depletion deduction to which the decedent was entitled at
clude in income the earnings portion of the distribution. the time of death is allowable on the decedent's final re-
Any balance remaining at the close of the 30-day period is turn, and no depletion deduction in respect of a decedent
deemed to be distributed at that time. The amount inclu- is allowed to anyone else.
ded in income is reduced by any qualified education ex- For more information about depletion, see chapter 9 in
penses of the decedent that are paid by the beneficiary Pub. 535, Business Expenses.
within 1 year after the decedent's date of death. An estate
tax deduction, discussed later, applies to the amount in-
Estate Tax Deduction
cluded in income by a beneficiary other than the dece-
dent's spouse or family member.
Income that the decedent had a right to receive is inclu-
HSA, Archer MSA, or Medicare Advantage MSA. The ded in the decedent's gross estate and is subject to estate
treatment of an HSA, an Archer MSA, or a Medicare Ad- tax. This income in respect of a decedent is also taxed
vantage MSA at the death of the account holder depends when received by the recipient (estate or beneficiary).
on who acquires the interest in the account. If the dece- However, an income tax deduction is allowed to the recip-
dent's estate acquired the interest, see the discussion un- ient for the estate tax paid on the income.
der Final Income Tax Return for Decedent—Form 1040 or
The deduction for estate tax paid can only be claimed
1040-SR, earlier.
for the same tax year in which the income in respect of a
If the decedent's spouse is the designated beneficiary
decedent must be included in the recipient's income. (This
of the account, the account becomes that spouse's Archer
is also true for income in respect of a prior decedent.)
MSA. It is subject to the rules discussed in Pub. 969.
Any other beneficiary (including a spouse that isn't the Individuals can claim this deduction only as an itemized
designated beneficiary) must include in income the FMV deduction on line 16 of Schedule A (Form 1040). Estates
of the assets in the account on the decedent's date of can claim the deduction on line 19 of Form 1041.
death. This amount must be reported for the beneficiary's
tax year that includes the decedent's date of death. The If income in respect of a decedent is capital gain in-
amount included in income is reduced by any qualified come, you must reduce the gain, but not below zero, by

Publication 559 (2022) Page 17

- 18 -

Page 18 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

any deduction for estate tax paid on such gain. This ap- $12,000
plies in figuring the following. $20,000 X $4,620 = $2,772
• The maximum tax on net capital gain (including quali-
fied dividends). If the amount you collected for the accounts receivable
was more than $12,000, you would still claim $2,772 as
• The exclusion for gain on small business stock under an estate tax deduction because only the $12,000 actually
section 1202. reported on the estate tax return can be used in the above
• The limitation on capital losses. computation. However, if you collected less than the
$12,000 reported on the estate tax return, use the smaller
Computation amount to figure the estate tax deduction.

To figure a recipient's estate tax deduction, determine: Estates. The estate tax deduction allowed to an estate is
figured in the same manner discussed earlier. However,
• The estate tax that qualifies for the deduction, and any income in respect of a decedent received by the es-
• The recipient's part of the deductible tax. tate during the tax year is reduced by any such income
properly paid, credited, or required to be distributed by the
Deductible estate tax. The estate tax is the tax on the estate to a beneficiary. The beneficiary would include
taxable estate, reduced by any credits allowed. The es- such distributed income in respect of a decedent for figur-
tate tax qualifying for the deduction is the part of the net ing the beneficiary's estate tax deduction.
value of all the items in the estate that represent income in
respect of a decedent. Net value is the excess of the Surviving annuitants. For the estate tax deduction, an
items of income in respect of a decedent over the items of annuity received by a surviving annuitant under a joint and
expenses in respect of a decedent. The deductible estate survivor annuity contract is considered income in respect
tax is the difference between the actual estate tax and the of a decedent. The deceased annuitant must have died
estate tax determined without including net value. after the annuity starting date. You must make a special
computation to figure the estate tax deduction for the sur-
Example 1. J. Sage used the cash method of account- viving annuitant. See Regulations section 1.691(d)-1.
ing. At the time of death, J. Sage was entitled to receive
$12,000 from clients for services provided and had ac- Gifts, Insurance, and Inheritances
crued bond interest of $8,000, for total income in respect
of a decedent of $20,000. J. Sage also owed $5,000 for Property received as a gift, bequest, or inheritance isn't in-
business expenses for which the estate is liable. The in- cluded in your income. However, if property you receive in
come and expenses are reported on J. Sage's estate tax this manner later produces income, such as interest, divi-
return. dends, or rents, that income is taxable to you. The income
The tax on J. Sage's estate is $9,460, after credits. The from property donated to a trust that is paid, credited, or
net value of the items included as income in respect of the distributed to you is taxable income to you. If the gift, be-
decedent is $15,000 ($20,000 − $5,000). The estate tax quest, or inheritance is the income from property, that in-
determined without including the $15,000 in the taxable come is taxable to you.
estate is $4,840, after credits. The estate tax that qualifies
for the deduction is $4,620 ($9,460 − $4,840). If you receive property from a decedent's estate in sat-
isfaction of your right to the income of the estate, it is trea-
Recipient's deductible part. Figure the recipient's part ted as a bequest or inheritance of income from property.
of the deductible estate tax by dividing the estate tax See Distributions to Beneficiaries, later.
value of the items of income in respect of a decedent in-
cluded in the recipient's income (the numerator) by the to-
Insurance
tal value of all items included in the estate that represent
income in respect of a decedent (the denominator). If the
The proceeds from a decedent's life insurance policy paid
amount included in the recipient's income is less than the
by reason of the decedent’s death are generally excluded
estate tax value of the item, use the lesser amount in the
from income. The exclusion applies to any beneficiary,
numerator.
whether a family member or other individual, a corpora-
Example 2. As the beneficiary of J. Sage's estate (Ex- tion, or a partnership.
ample 1), you collect the $12,000 accounts receivable
Veterans' insurance proceeds. Veterans' insurance
from J. Sage’s clients. You will include the $12,000 in your
proceeds and dividends aren't taxable either to the vet-
income in the tax year you receive it. If you itemize your
eran or to the beneficiaries.
deductions in that tax year, you can claim an estate tax
Interest on dividends left on deposit with the Depart-
deduction of $2,772 figured as follows:
ment of Veterans Affairs isn't taxable.
Value included in your income
Estate tax qualifying for
Total value of income in respect X Life insurance proceeds. Life insurance proceeds paid
of decedent deduction to a beneficiary because of the death of the insured (or
because the insured is a member of the U.S. uniformed
services who is missing in action) aren't taxable unless the

Page 18 Publication 559 (2022)

- 19 -

Page 19 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

policy was turned over to the recipient for a price. This is the insurance company by the number of installments to
true even if the proceeds are paid under an accident or which the beneficiary is entitled. In case the beneficiary
health insurance policy or an endowment contract. If the dies before receiving all the installments, a secondary
proceeds are received in installments, see the discussion beneficiary is entitled to the same exclusion.
under Insurance received in installments, later.
Example. As beneficiary, you choose to receive
Accelerated death benefits. A beneficiary can exclude $100,000 of life insurance proceeds in 10 annual install-
from income accelerated death benefits received on the ments of $11,000. Each year, you can exclude from your
life of an insured individual if certain requirements are income $10,000 ($100,000 ÷ 10) as a return of principal.
met. Accelerated death benefits are amounts received un- The balance of the installment, $1,000, is taxable as inter-
der a life insurance contract before the death of the in- est income.
sured. These benefits also include amounts received on
Specified amount payable. If each installment re-
the sale or assignment of the contract to a viatical settle-
ceived under the insurance contract is a specific amount
ment provider. This exclusion applies only if the insured
based on a guaranteed rate of interest, but the number of
was a terminally ill individual or a chronically ill individual.
installments that will be received is uncertain, the part of
This exclusion doesn't apply if the insured is a director, of-
each installment excluded from income is the amount held
ficer, or employee, or has a financial interest in any trade
by the insurance company divided by the number of in-
or business carried on by the beneficiary.
stallments necessary to use up the principal and guaran-
Terminally ill individual. A terminally ill individual is teed interest in the contract.
one who has been certified by a physician as having an ill-
ness or physical condition that can reasonably be expec- Example. The face amount of the policy is $200,000,
ted to result in death in 24 months or less from the date of and as beneficiary you choose to receive annual install-
certification. ments of $12,000. The insurer's settlement option guaran-
tees you this amount for 20 years based on a guaranteed
Chronically ill individual. A chronically ill individual is rate of interest. It also provides that extra interest may be
one who has been certified as one of the following. credited to the principal balance according to the insurer's
• An individual who, for at least 90 days, is unable to earnings. The excludable part of each guaranteed install-
perform at least two activities of daily living without ment is $10,000 ($200,000 ÷ 20 years). The balance of
substantial assistance due to a loss of functional ca- each guaranteed installment, $2,000, is interest income to
pacity. you. The full amount of any additional payment for interest
is income to you.
• An individual who requires substantial supervision to
be protected from threats to health and safety due to Installments for life. If the beneficiary under an insur-
severe cognitive impairment. ance contract is entitled to receive the proceeds in install-
A certification must have been made by a licensed ments for the rest of the beneficiary’s life without a refund
health care practitioner within the previous 12 months. or period-certain guarantee, the excluded part of each in-
stallment can be determined by dividing the amount held
Exclusion limited. If the insured was a chronically ill by the insurance company by the beneficiary’s life expect-
individual, exclusion of accelerated death benefits is limi- ancy. If there is a refund or period-certain guarantee, the
ted to the cost incurred in providing qualified long-term amount held by the insurance company for this purpose is
care services for the insured. In determining the cost in- reduced by the actuarial value of the guarantee.
curred, don't include amounts paid or reimbursed by in-
surance or otherwise. Subject to certain limits, exclude Example. As beneficiary, you choose to receive the
payments received on a periodic basis without regard to $50,000 proceeds from a life insurance contract under a
costs. life-income-with-cash-refund option. You are guaranteed
$2,700 a year for the rest of your life (which is estimated
Interest option on insurance. If an insurance company by use of mortality tables to be 25 years from the insured's
pays interest only on proceeds from life insurance left on death). The actuarial value of the refund feature is $9,000.
deposit, the interest is taxable. The amount held by the insurance company, reduced by
the value of the guarantee, is $41,000 ($50,000 − $9,000)
Insurance received in installments. If a beneficiary re- and the excludable part of each installment representing a
ceives life insurance proceeds in installments, the benefi- return of principal is $1,640 ($41,000 ÷ 25). The remaining
ciary can exclude part of each installment from income. $1,060 ($2,700 − $1,640) is interest income to you. If you
To determine the part excluded, divide the amount held should die before receiving the entire $50,000, the refund
by the insurance company (generally the total lump sum payable to the refund beneficiary isn't taxable.
payable at the death of the insured person) by the number
of installments to be paid. Include anything over this ex- Flexible premium contracts. A life insurance contract
cluded part in income as interest. (including any qualified additional benefits) qualifies as a
Specified number of installments. If a beneficiary flexible premium life insurance contract if it provides for
will receive a specified number of installments under the the payment of one or more premiums that aren't fixed by
insurance contract, figure the part of each installment the the insurer as to both timing and amount. For a flexible
beneficiary can exclude by dividing the amount held by premium contract issued before January 1, 1985, the

Publication 559 (2022) Page 19

- 20 -

Page 20 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

proceeds paid under the contract because of the death of If you must pay any additional estate (recapture) tax,
the insured will be excluded from the recipient's income you can elect to increase your basis in the special-use val-
only if the contract meets the requirements explained un- uation property to its FMV on the date of the decedent's
der section 101(f). death (or on the alternate valuation date, if it was elected
by the personal representative). If you elect to increase
Basis of Inherited Property your basis, you must pay interest on the recapture tax for
the period beginning 9 months after the decedent's death
The basis of property inherited from a decedent is gener- until the date you pay the recapture tax.
ally one of the following. For more information on the recapture tax, see the In-
• The FMV of the property on the date of the individual's structions for Form 706-A, United States Additional Estate
death. Tax Return.

• The FMV on the alternate valuation date (discussed in S corporation stock. The basis of inherited S corpora-
the Instructions for Form 706) if elected by the per- tion stock must be reduced if there is income in respect of
sonal representative. a decedent attributable to that stock.

• The value under the special-use valuation method for Joint interest. Figure the surviving tenant's new basis of
real property used in farming or other closely held jointly owned property (joint tenancy or tenancy by the en-
business (see Special-use valuation, later), if elected tirety) by adding the surviving tenant's original basis in the
by the personal representative. property to the value of the part of the property included in
• The decedent's adjusted basis in land to the extent of the decedent's estate, discussed earlier. Subtract from
the value excluded from the decedent's taxable estate the sum any deductions for wear and tear, such as depre-
as a qualified conservation easement (discussed in ciation or depletion, allowed to the surviving tenant on that
the Instructions for Form 706). property.

Exception for appreciated property. If you or your Example. F. Maple and sibling A. Maple owned, as
spouse gave appreciated property to an individual during joint tenants with right of survivorship, rental property they
the 1-year period ending on the date of that individual's purchased for $60,000. A. Maple paid $15,000 of the pur-
death and you (or your spouse) later acquired the same chase price and F. Maple paid $45,000. Under local law,
property from the decedent, your basis in the property is each had a half interest in the income from the property.
the same as the decedent's adjusted basis immediately When F. Maple died, the FMV of the property was
before death. $100,000. Depreciation deductions allowed before F. Ma-
ple's death were $20,000. A. Maple's basis in the property
Appreciated property. Appreciated property is prop- is $80,000 figured as follows:
erty that had an FMV greater than its adjusted basis on
the day it was transferred to the decedent. A. Maple's original basis. . . . . . . . . . . . $15,000
Interest acquired from F. Maple
Special-use valuation. If you are a qualified heir and ( / of $100,000)3 4 . . . . . . . . . . . . . . . . . 75,000 $90,000
you receive a farm or other closely held business real Minus: / of $20,000 depreciation1 2 . . . . . . . . . . . . . . 10,000
property from the estate for which the personal represen- A. Maple's basis. . . . . . . . . . . . . . . . . . . . . . . . $80,000
tative elected special-use valuation, the property is valued
on the basis of its actual use rather than its FMV. Qualified joint interest. One-half of the value of prop-
If you are a qualified heir and you buy special-use valu- erty owned by a decedent and spouse as tenants by the
ation property from the estate, your basis is equal to the entirety, or as joint tenants with right of survivorship if the
estate's basis (determined under the special-use valua- decedent and spouse are the only joint tenants, is inclu-
tion method) immediately before your purchase plus any ded in the decedent's gross estate. This is true regardless
gain recognized by the estate. of how much each contributed toward the purchase price.
You are a qualified heir if you are an ancestor (parent, Figure the basis for a surviving spouse by adding
grandparent, etc.), the spouse, or a lineal descendant one-half of the property's cost basis to the value included
(child, grandchild, etc.) of the decedent, a lineal descend- in the gross estate. Subtract from this sum any deductions
ant of the decedent's parent or spouse, or the spouse of for wear and tear, such as depreciation or depletion, al-
any of these lineal descendants. lowed on that property to the surviving spouse.
For more information on special-use valuation, see the
Instructions for Form 706. Example. D. Gilbert and J. Gilbert owned, as tenants
Increased basis for special-use valuation prop- by the entirety, rental property they purchased for
erty. Under certain conditions, some or all of the estate $60,000. D. Gilbert paid $15,000 of the purchase price
tax benefits obtained by using the special-use valuation and J. Gilbert paid $45,000. Under local law, each had a
will be subject to recapture. Generally, an additional es- half interest in the income from the property. When J. Gil-
tate tax must be paid by the qualified heir if the property is bert died, the FMV of the property was $100,000. Depreci-
disposed of, or is no longer used for a qualifying purpose ation deductions allowed before J. Gilbert's death were
within 10 years of the decedent's death. $20,000. D. Gilbert's basis in the property is $70,000 fig-
ured as follows:

Page 20 Publication 559 (2022)

- 21 -

Page 21 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

One-half of cost basis ( / of $60,000)1 2 . . . $30,000 For transitional guidance on the definitions of “qualified
Interest acquired from J. Gilbert appraisal” and “qualified appraiser,” see Notice 2006-96,
( / of $100,000)1 2 . . . . . . . . . . . . . . . . . 50,000 $80,000 2006-46 I.R.B. 902, available at IRS.gov/irb/2006-46_IRB/
Minus: / of $20,000 depreciation1 2 . . . . . . . . . . . . . . 10,000 ar13.html.
D. Gilbert's basis. . . . . . . . . . . . . . . . . . . . . . . . $70,000 The definitions apply to appraisals prepared for the fol-
lowing.
See Pub. 551, Basis of Assets, for more information on • Donated property for which a deduction of more than
basis. If the decedent and their spouse lived in a commun- $5,000 is claimed.
ity property state, see the discussion in that publication
about figuring the basis of community property after a • Returns filed after August 17, 2006.
spouse's death.
Holding period. If you sell or dispose of inherited prop-
Depreciation. If a beneficiary can depreciate inherited erty that is a capital asset, the gain or loss is considered
property, the Modified Accelerated Cost Recovery Sys- long term, regardless of how long you held the property.
tem (MACRS) must be used to determine depreciation.
Property distributed in kind. Your basis in property
For joint interests and qualified joint interests, use the
distributed in kind by a decedent's estate is the same as
following computations to figure depreciation.
the estate's basis immediately before the distribution plus
• The first computation is for the original basis in the any gain, or minus any loss, recognized by the estate.
property. Property is distributed in kind if it satisfies your right to re-
• The second computation is for the inherited part of the ceive another property or amount, such as the income of
property. the estate or a specific dollar amount. Property distributed
in kind generally includes any noncash property you re-
Continue depreciating the original basis under the same ceive from the estate other than the following.
method used in previous years. Depreciate the inherited
part using MACRS. • A specific bequest (unless it must be distributed in
MACRS consists of two depreciation systems, the more than three installments).
General Depreciation System (GDS) and the Alternative • Real property, the title to which passes directly to you
Depreciation System (ADS). For more information on under local law.
MACRS, see Pub. 946, How To Depreciate Property.
For information on an estate's recognized gain or loss on
Valuation misstatements. If the value or adjusted basis distributions in kind, see Income To Include under Income
of any property claimed on an income tax return is 150% Tax Return of an Estate—Form 1041, later.
or more of the amount determined to be the correct
amount, there is a substantial valuation misstatement. If Other Items of Income
the value or adjusted basis is 200% or more of the amount
determined to be the correct amount, there is a gross val- Some other items of income that a survivor or beneficiary
uation misstatement. may receive are discussed below. Lump-sum payments
received by the surviving spouse or beneficiary of a de-
Understatements. A substantial estate or gift tax val- ceased employee may represent the following.
uation misstatement occurs when the value of property re-
ported is 65% or less of the actual value of the property. A • Accrued salary payments.
gross valuation misstatement occurs if any property on a • Distributions from employee profit-sharing, pension,
return is valued at 40% or less of the value determined to annuity, and stock bonus plans.
be correct.
• Other items that should be treated separately for tax
Penalty. If a misstatement results in an underpayment purposes.
of tax of more than $5,000, an addition to tax of 20% of
The treatment of these lump-sum payments depends on
the underpayment can apply. The penalty increases to
what the payments represent.
40% if the value or adjusted basis reported is a gross val-
uation misstatement. Public safety officers. Special rules apply to certain
The IRS may waive all or part of the 20% addition to tax amounts received due to the death of a public safety offi-
(for substantial valuation overstatement) if the following cer (a law enforcement officer, fire fighter, chaplain, or
apply. member of an ambulance crew or rescue squad).
• The claimed value of the property was based on a The provisions for public safety officers apply to a
qualified appraisal made by a qualified appraiser. ! chaplain killed in the line of duty after September
• In addition to obtaining such appraisal, the taxpayer CAUTION 10, 2001, if the chaplain was responding to a fire,
made a good faith investigation of the value of the rescue, or police emergency as a member or employee of
contributed property. a fire or police department.

No waiver is available for the 40% addition to tax (for Death benefits. The death benefit payable to eligible
gross valuation overstatement). survivors of public safety officers who die as a result of

Publication 559 (2022) Page 21

- 22 -

Page 22 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

traumatic injuries sustained in the line of duty isn't inclu- federal civil service employees or retirees, see Pub. 721,
ded in either the beneficiaries' income or the decedent's Tax Guide to U.S. Civil Service Retirement Benefits.
gross estate. This benefit is administered through the Bu-
reau of Justice Assistance (BJA). Inherited IRAs. If a person other than the decedent's
The BJA can pay the eligible survivors an emergency spouse inherits the decedent's traditional IRA or Roth IRA,
interim benefit up to $3,000 if it determines that a public that person can't treat the IRA as one established on the
safety officer's death is one for which a death benefit will person’s behalf. If a distribution from a traditional IRA is
probably be paid. If there is no final payment, the recipient from contributions that were deducted or from earnings
of the interim benefit is liable for repayment. However, the and gains in the IRA, it is fully taxable income. If there
BJA may waive all or part of the repayment if it will cause were nondeductible contributions, an allocation between
a hardship. Any repayment waived isn't included in in- taxable and nontaxable income must be made. For infor-
come. mation on distributions from a Roth IRA, see the discus-
sion earlier under Income in Respect of a Decedent. The
Survivor benefits. Generally, a survivor annuity re- inherited IRA can't be rolled over into, or receive a rollover
ceived by the spouse, former spouse, or child of a public from, another IRA. No deduction is allowed for amounts
safety officer killed in the line of duty is excluded from the paid into that inherited IRA. For more information about
recipient's income. The annuity must be provided under a IRAs, see Pubs. 590-A and 590-B.
government plan and is excludable to the extent that it is
attributable to the officer's service as a public safety offi- Estate income. Estates may have to pay federal income
cer. tax. Beneficiaries may have to pay tax on their share of
The exclusion doesn't apply if the recipient's actions estate income. However, there is never a double tax. See
were responsible for the officer's death. It also doesn't ap- Distributions to Beneficiaries, later.
ply in the following circumstances.
• The death was caused by the intentional misconduct
of the officer or by the officer's intention to cause such Income Tax Return of an
death.
Estate—Form 1041
• The officer was voluntarily intoxicated at the time of
death. An estate is a taxable entity separate from the decedent
• The officer was performing officer duties in a grossly and comes into being with the death of the individual. It
negligent manner at the time of death. exists until the final distribution of its assets to the heirs
and other beneficiaries. The income earned by the assets
Salary or wages. Salary or wages paid after the employ- during this period must be reported by the estate under
ee's death are usually taxable income to the beneficiary. the conditions described in this publication. The tax is
See Wages, earlier, under Specific Types of Income in generally figured in the same manner and on the same
Respect of a Decedent. basis as for individuals, with certain differences in the
If the decedent is a specified terrorist victim (see computation of deductions and credits, as explained later.
! Specified Terrorist Victim, earlier), certain income The estate's income, like an individual's income, must
CAUTION received by the beneficiary or the estate isn't tax-
be reported annually on either a calendar or fiscal year ba-
able. For more information, see Pub. 3920. sis. The personal representative chooses the estate's ac-
counting period upon filing the first Form 1041. The es-
Rollover distributions. An employee's surviving spouse tate's first tax year can be any period that ends on the last
who receives an eligible rollover distribution may roll it day of a month and doesn't exceed 12 months.
over tax free into an IRA, a qualified plan, a section 403
Generally, once chosen, the tax year can't be changed
annuity, or a section 457 plan. For more information, see
without IRS approval. Also, on the first income tax return,
Pub. 575, Pension and Annuity Income; and Form 4972,
the personal representative must choose the accounting
Tax on Lump-Sum Distributions.
method (cash, accrual, or other) to report the estate's in-
Rollovers by nonspouse beneficiary. A beneficiary come. Once a method is used, it ordinarily can't be
other than the employee's surviving spouse may be able changed without IRS approval. For a more complete dis-
to roll over all or part of a distribution from an eligible re- cussion of accounting periods and methods, see Pub.
tirement plan of a deceased employee. The nonspouse 538.
beneficiary must be the designated beneficiary of the em-
ployee. The distribution must be a direct trustee-to-trustee Filing Requirements
transfer to the beneficiary’s IRA set up to receive the dis-
tribution. The transfer will be treated as an eligible rollover Every domestic estate with gross income of $600 or more
distribution and the receiving plan will be treated as an in- during a tax year must file a Form 1041. If one or more of
herited IRA. For more information on inherited IRAs, see the beneficiaries of the domestic estate are nonresident
Pubs. 590-A and 590-B. aliens, the personal representative must file Form 1041,
even if the gross income of the estate is less than $600.
Pensions and annuities. For beneficiaries who receive
pensions and annuities, see Pub. 575. For beneficiaries of

Page 22 Publication 559 (2022)

- 23 -

Page 23 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

A fiduciary for a nonresident alien estate with be liable for tax due and unpaid to the extent of the value
U.S.-source income, including any income that is effec- of the estate assets received.
tively connected with the conduct of a trade or business in Income of the estate is taxed to either the estate or the
the United States, must file Form 1040-NR as the income beneficiary, but not to both.
tax return of the estate.
Nonresident alien beneficiary. In addition to filing
A nonresident alien who was a resident of Puerto Rico, Form 1041, the personal representative may need to file
Guam, American Samoa, or the Commonwealth of the Form 1040-NR and pay the tax due, if any, if there is a
Northern Mariana Islands for the entire tax year will, for nonresident alien beneficiary. There are a number of fac-
this purpose, be treated as a resident alien of the United tors which determine whether a Form 1040-NR is re-
States. quired. For information on who must file Form 1040-NR,
see Pub. 519, U.S. Tax Guide for Aliens.
Schedule K-1 (Form 1041) If a nonresident alien has an appointed agent in the
United States, the personal representative isn't responsi-
The personal representative must file a separate Sched- ble for filing Form 1040-NR and paying any tax due. How-
ule K-1 (Form 1041), Beneficiary's Share of Income, De- ever, a copy of the document appointing the agent must
ductions, Credits, etc., or an acceptable substitute (de- be attached to the estate's Form 1041.
scribed below), for each beneficiary. File these schedules The personal representative must also file Form 1042,
with Form 1041. Annual Withholding Tax Return for U.S. Source Income of
Foreign Persons, and Form 1042-S, Foreign Person's
The personal representative must ask each beneficiary U.S. Source Income Subject to Withholding, to report and
to provide a TIN, which must be reported on the Sched- transmit withheld tax on distributable net income (dis-
ule K-1 (Form 1041). A $50 penalty is charged for each cussed later) actually distributed. This applies to the ex-
failure to provide the identifying number of each benefi- tent the distribution consists of an amount subject to with-
ciary unless reasonable cause is established. A nonresi- holding. For more information, see Pub. 515.
dent alien beneficiary with a withholding certificate must
generally provide a TIN (see Pub. 515). A TIN isn't re- Amended Return
quired for an executor or administrator of the estate un-
less that person is also a beneficiary. If an amended Form 1041 must be filed, use a copy of the
form for the appropriate year and check the “Amended re-
The personal representative must also give a Sched- turn” box. Complete the entire return, correct the appropri-
ule K-1 (Form 1041), or a substitute, to each beneficiary ate lines with the new information, and refigure the tax lia-
by the date on which the Form 1041 is filed. Failure to pro- bility. On an attached sheet, explain the reason for the
vide this payee statement can result in a penalty of $290 changes and identify the lines and amounts changed.
for each failure. This penalty also applies if information is
omitted or incorrect information is included on the payee Note. If the amended return results from an NOL loss
statement. If it is shown that such failure is due to inten- carryback, check the "Net operating loss carryback" box.
tional disregard of the filing requirement, the penalty For more information, see the Instructions for Form 1041.
amount increases.
If the amended return results in a change to income, or
No prior approval is needed for a substitute Sched- a change in distribution of any income or other information
ule K-1 (Form 1041) that is an exact copy of the official provided to a beneficiary, an amended Schedule K-1
schedule or that follows the specifications in Pub. 1167, (Form 1041) must be filed with Form 1041 and a copy
General Rules and Specifications for Substitute Forms given to each beneficiary. Check the “Amended K-1” box
and Schedules. Prior approval is required for any other at the top of Schedule K-1 (Form 1041).
substitute Schedule K-1 (Form 1041).
Beneficiaries. The personal representative has a fidu- Information Returns
ciary responsibility to the ultimate recipients of the income
Even though the personal representative may not have to
and the property of the estate. While the courts use a
file an income tax return for the estate, Form 1099-DIV,
number of names to designate specific types of beneficia-
Form 1099-INT, Form 1099-MISC, or Form 1099-NEC
ries or the recipients of various types of property, this pub-
may need to be filed if the estate received income as a
lication refers to all of them as “beneficiaries.”
nominee or middleman for another person. For more infor-
Liability of the beneficiary. The income tax liability of mation on filing information returns, see the General In-
an estate attaches to the assets of the estate. If the in- structions for Certain Information Returns.
come is distributed or must be distributed during the cur-
rent tax year, the income is reportable by each beneficiary The personal representative will not have to file infor-
on the beneficiary’s individual income tax return. If the in- mation returns for the estate if the estate is the owner of
come doesn't have to be distributed, and isn't distributed record, Form 1041 is filed for the estate (reporting the
but is retained by the estate, the income tax on the income name, address, and identifying number of each actual
is payable by the estate. If the income is distributed later owner), and a completed Schedule K-1 (Form 1041) is
without the payment of the taxes due, the beneficiary can provided to each actual owner.

Publication 559 (2022) Page 23

- 24 -

Page 24 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Penalty. A penalty of up to $290 can be charged for each ciaries. While the personal representative may have the
failure to file or failure to include correct information on an legal authority to dispose of the property, title to it may be
information return. (Failure to include correct information vested (given a legal interest in the property) in one or
includes failure to include all the information required.) If it more of the beneficiaries. This is usually true of real prop-
is shown that such failure is due to intentional disregard of erty. To determine whether any gain or loss must be re-
the filing requirement, the penalty amount increases. ported by the estate or by the beneficiaries, consult local
See the General Instructions for Certain Information law to determine the legal owner.
Returns for more information.
Redemption of stock to pay death taxes. Under
certain conditions, a distribution to a shareholder (includ-
Copy of the Will ing the estate) in redemption of stock included in the de-
cedent's gross estate may be allowed capital gain (or
The personal representative does not have to include a
loss) treatment.
copy of the decedent's will with Form 1041. If the will is
later requested, attach a statement to it indicating the pro- Character of asset. The character of an asset in the
visions that determine how much of the estate's income is hands of an estate determines whether gain or loss on its
taxable to the estate or to the beneficiaries. A statement sale or other disposition is capital or ordinary. The asset's
signed by the personal representative under penalties of character depends on how the estate holds or uses it. If it
perjury that the will is a true and complete copy should was a capital asset to the decedent, it will generally be a
also be attached. capital asset to the estate. If it was land or depreciable
property used in the decedent's business and the estate
Income To Include continues the business, it will generally have the same
character to the estate that it had in the decedent's hands.
The estate's taxable income is generally figured the same If it was held by the decedent for sale to customers, it will
way as an individual's income, except as explained in the generally be considered to be held for sale to customers
following discussions. by the estate if the decedent's business continues to oper-
ate during the administration of the estate.
If the decedent is a specified terrorist victim (see
The gain from a sale of depreciable property be-
! Specified Terrorist Victim, earlier), certain income
CAUTION received by the estate isn't taxable. See Pub. ! tween an estate and a beneficiary of that estate
3920. CAUTION will be treated as ordinary income, unless the sale
or exchange was made to satisfy a pecuniary (cash) be-
Gross income of an estate consists of all items of in- quest.
come received or accrued during the tax year. It includes
dividends, interest, rents, royalties, gain from the sale of Sale of decedent's residence. If the estate is the le-
property, and income from business, partnerships, trusts, gal owner of a decedent's residence and the personal rep-
and any other sources. For a discussion of income from resentative sells it in the course of administration, the tax
dividends, interest, and other investment income, as well treatment of gain or loss depends on how the estate holds
as gains and losses from the sale of investment property, or uses the former residence. For example, if, as the per-
see Pub. 550, Investment Income and Expenses. For a sonal representative, you intend to realize the value of the
discussion of gains and losses from the sale of other prop- house through sale, the residence is a capital asset held
erty, including business property, see Pub. 544, Sales and for investment and gain or loss is capital gain or loss
Other Dispositions of Assets. (which may be deductible). This is the case even though it
was the decedent's personal residence and even if you
If the personal representative's duties include the oper-
didn't rent it out. If, however, the house isn't held for busi-
ation of the decedent's business, see Pub. 334. That pub-
ness or investment use (for example, if you intend to per-
lication provides general information about the tax laws
mit a beneficiary to live in the residence rent free and then
that apply to a sole proprietorship.
distribute it to the beneficiary to live in), and you later de-
Income in respect of a decedent. The personal repre- cide to sell the residence without first converting it to busi-
sentative of the estate may receive income the decedent ness or investment use, any gain is capital gain, but a loss
would have reported had death not occurred. For an ex- isn't deductible.
planation of this income, see Income in Respect of a De- Holding period. An estate (or other recipient) that ac-
cedent under Other Tax Information, earlier. An estate quires property from a decedent and sells or otherwise
may qualify to claim a deduction for estate taxes if the es- disposes of it is considered to have held that property for
tate must include in gross income for any tax year an more than 1 year, no matter how long the estate and the
amount of income in respect of a decedent. See Estate decedent actually held the property.
Tax Deduction under Other Tax Information, earlier.
Basis of property. The basis used to figure gain or
Gain (or loss) from sale of property. During the ad- loss for property the estate receives from the decedent is
ministration of the estate, the personal representative may usually its FMV at the date of death. See Basis of Inheri-
find it necessary or desirable to sell all or part of the es- ted Property under Other Tax Information, earlier, for other
tate's assets to pay debts and expenses of administration, basis in inherited property.
or to make proper distributions of the assets to the benefi-

Page 24 Publication 559 (2022)

- 25 -

Page 25 of 51      Fileid: … tions/p559/2022/a/xml/cycle02/source                              10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

If  the  estate  purchases  property  after  the  decedent's      1. The distribution satisfies the beneficiary's right to re-
death, the basis will generally be its cost.                      ceive either of the following.
The basis of certain appreciated property the estate re-
                                                                       a. A specific dollar amount (whether payable in cash, 
ceives from the decedent will be the decedent's adjusted 
                                                                          in unspecified property, or in both).
basis in the property immediately before death. This ap-
plies if the property was acquired by the decedent as a gift           b. A specific property other than the property distrib-
during the 1-year period before death, the property's FMV                 uted.
on the date of the gift was greater than the donor's adjus-
                                                                  2. An election is made to recognize the gain or loss on 
ted basis, and the proceeds of the sale of the property are 
                                                                  the estate's income tax return (section 643(e)(3) elec-
distributed to the donor (or the donor's spouse).
                                                                  tion).
Schedule D (Form 1041) and Form 8949.               Use Form 
                                                                  The  gain  or  loss  is  usually  the  difference  between  the 
8949, Sales and Other Dispositions of Capital Assets, to 
                                                                  FMV of the property when distributed and the estate's ba-
report  most  sales  and  exchanges  of  capital  assets.  Use 
                                                                  sis in the property. However, see Gain from sale of spe-
Schedule D (Form 1041), Capital Gains and Losses, to re-
                                                                  cial-use valuation property, earlier, for a limit on the gain 
port the overall capital gains and losses from transactions 
                                                                  recognized  on  a  transfer  of  such  property  to  a  qualified 
reported  on  Form  8949,  certain  transactions  that  don't 
                                                                  heir.
have to be reported on Form 8949, and certain other capi-
                                                                  If you elect to recognize gain or loss, the election ap-
tal  gains  and  losses.  For  additional  information,  see  the 
                                                                  plies  to  all  noncash  distributions  during  the  tax  year  ex-
Instructions for Form 8949 and the Instructions for Sched-
                                                                  cept  charitable  distributions  and  specific  bequests.  To 
ule D (Form 1041).
                                                                  make  the  election,  report  the  transaction  on  Form  8949 
Installment  obligations. If  an  installment  obligation         and/or Schedule D (Form 1041), as applicable, and check 
owned by the decedent is transferred by the estate to the         the box on Form 1041, Other Information, line 7. The elec-
obligor (buyer or person obligated to pay) or is canceled         tion must be made by the due date (including extensions) 
at death, include the income from that event in the gross         of the estate's income tax return for the year of distribu-
income of the estate. See Installment obligations under In-       tion. However, if the return is timely filed without making 
come in Respect of a Decedent, earlier. See Pub. 537 for          the election, the election can be made by filing an amen-
information about installment sales.                              ded return within 6 months of the due date of the return 
                                                                  (excluding extensions). Attach Form 8949 and/or Sched-
Gain  from  sale  of  special-use  valuation  property. If        ule D (Form 1041), as applicable, to the amended return 
the personal representative elected special-use valuation         and  enter  “Filed  pursuant  to  section  301.9100-2”  on  the 
for farm or other closely held business real property and         form.  File  the  amended  return  at  the  same  address  you 
that property is sold to a qualified heir, the estate will rec-   filed the original return. IRS consent is required to revoke 
ognize gain on the sale if the FMV on the date of the sale        the election.
exceeds the FMV on the date of the decedent's death (or           For  more  information,  see Property  distributed  in  kind 
on the alternate valuation date if it was elected).               under Income Distribution Deduction, later.
Qualified heirs.  Qualified heirs include the decedent's                  Under  the  related  persons  rules,  a  loss  can't  be 
ancestors  (parents,  grandparents,  etc.)  and  spouse,  the     !       claimed  for  property  distributed  to  a  beneficiary 
decedent's  lineal  descendants  (children,  grandchildren,       CAUTION unless the distribution is in discharge of a pecuni-
etc.) and their spouses, and lineal descendants (and their        ary bequest. Also, any gain on the distribution of deprecia-
spouses) of the decedent's parents or spouse.                     ble property is ordinary income.
For more information about special-use valuation, see 
Form 706 and its instructions.
                                                                  Exemption and Deductions
Gain from transfer of property to a political organiza-
tion. Appreciated  property  transferred  to  a  political  or-   In figuring taxable income, an estate is generally allowed 
ganization  is  treated  as  sold  by  the  estate.  Appreciated  the same deductions as an individual. Special rules, how-
property is property that has an FMV (on the date of the          ever, apply to some deductions for an estate. This section 
transfer) greater than the estate's basis. The gain recog-        includes discussions of those deductions affected by the 
nized is the difference between the estate's basis and the        special rules.
FMV on the date transferred.
A political organization is any party, committee, associ-         Exemption Deduction
ation, fund, or other organization formed and operated to 
accept contributions or make expenditures for influencing         An  estate  is  allowed  an  exemption  deduction  of  $600  in 
the nomination, election, or appointment of an individual         figuring its taxable income. No exemption for dependents 
to any federal, state, or local public office.                    is allowed to an estate. Even though the first return of an 
                                                                  estate may be for a period of less than 12 months, the ex-
Gain or loss on distributions in kind. An estate recog-           emption is $600. If, however, the estate was given permis-
nizes gain or loss on a distribution of property in kind to a     sion to change its accounting period, the exemption is $50 
beneficiary only in the following situations.                     for each month of the short year.

Publication 559 (2022)                                                                                             Page 25

- 26 -

Page 26 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Charitable Contributions sentative must file a statement with the estate's income
tax return waiving the deduction for estate tax purposes.
An estate qualifies for a deduction for gross income paid See Administration Expenses, later.
or permanently set aside for qualified charitable organiza- The same rules that apply to individuals apply to the es-
tions. The AGI limits for individuals don't apply. However, tate, except that in figuring the AGI of the estate used to
to be deductible by an estate, the contribution must be figure the deductible loss, you deduct any administration
specifically provided for in the decedent's will. If there is expenses claimed. Use Form 4684, Casualties and
no will, or if the will makes no provision for the payment to Thefts, and its instructions to figure any loss deduction.
a charitable organization, then a deduction won't be al-
lowed even though all beneficiaries may agree to the gift. Carryover losses. Carryover losses resulting from NOLs
or capital losses sustained by the decedent before death
You can't deduct any contribution from income not in- can't be deducted on the estate's income tax return.
cluded in the estate's gross income. If the will specifically
provides that the contributions are to be paid out of the es- Administration Expenses
tate's gross income, the contributions are fully deductible.
However, if the will contains no specific provisions, the Expenses of administering an estate can be deducted ei-
contributions are considered to have been paid and are ther from the gross estate in figuring the federal estate tax
deductible in the same proportion as the gross income on Form 706 or from the estate's gross income in figuring
bears to the total of all classes (taxable and nontaxable) of the estate's income tax on Form 1041. However, these
income. expenses can't be claimed for both estate tax and income
tax purposes. In most cases, this rule also applies to ex-
You can't deduct a qualified conservation easement penses incurred in the sale of property by an estate (not
granted after the date of death and before the due date of
as a dealer).
the estate tax return. A contribution deduction is allowed
to the estate for estate tax purposes.
To prevent a double deduction, amounts otherwise al-
For more information about contributions, see Pub. lowable in figuring the decedent's taxable estate for fed-
526, Charitable Contributions and Pub. 561, Determining eral estate tax on Form 706 won't be allowed as a deduc-
the Value of Donated Property. tion in figuring the income tax of the estate or of any other
person unless the personal representative files a state-
ment, in duplicate, that the items of expense, as listed in
Losses
the statement, haven't been claimed as deductions for
Generally, an estate can claim a deduction for a loss it federal estate tax purposes and that all rights to claim
sustains on the sale of property. This includes a loss from such deductions are waived. One deduction or part of a
the sale of property (other than stock) to a personal repre- deduction can be claimed for income tax purposes if the
sentative of the estate, unless that person is a beneficiary appropriate statement is filed, while another deduction or
of the estate. part is claimed for estate tax purposes. Claiming a deduc-
tion in figuring the estate income tax isn't prevented when
For a discussion of an estate's recognized loss on a the same deduction is claimed on the estate tax return so
distribution of property in kind to a beneficiary, see In- long as the estate tax deduction isn't finally allowed and
come To Include, earlier. the preceding statement is filed. The statement can be
filed with the income tax return or at any time before the
An estate and a beneficiary of that estate are gen-
expiration of the statute of limitations that applies to the
! erally treated as related persons for purposes of tax year for which the deduction is sought. This waiver
CAUTION the disallowance of a loss on the sale of an asset
procedure also applies to casualty losses incurred during
between related persons. The disallowance doesn't apply
administration of the estate.
to a sale or exchange made to satisfy a pecuniary be-
quest. Accrued expenses. The rules preventing double deduc-
tions don't apply to deductions for taxes, interest, busi-
Net operating loss deduction. An estate can claim a ness expenses, and other items accrued at the date of
net operating loss (NOL) deduction, figured in the same death. These expenses are allowable as a deduction for
way as an individual's, except that it can't take the income estate tax purposes as claims against the estate and are
distribution deduction (discussed later) or the deduction also allowable as deductions in respect of a decedent for
for charitable contributions in figuring the loss or the loss income tax purposes. Deductions for interest, business
carryover. For a discussion of the carryover of an unused expenses, and other items not accrued at the date of the
NOL to a beneficiary upon termination of the estate, see decedent's death are allowable only as a deduction for
Termination of Estate, later. administration expenses for both estate and income tax
For information on NOLs, see Pub. 536. purposes and don't qualify for a double deduction.

Casualty and theft losses. Losses incurred from casu- Expenses allocable to tax-exempt income. When fig-
alties and thefts during the administration of the estate uring the estate's taxable income on Form 1041, you can't
can be deducted only if they haven't been claimed on the deduct administration expenses allocable to any of the es-
federal estate tax return (Form 706). The personal repre- tate's tax-exempt income. However, you can deduct these

Page 26 Publication 559 (2022)

- 27 -

Page 27 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

administration expenses when figuring the taxable estate Capital gains. Capital gains aren't automatically inclu-
for federal estate tax purposes on Form 706. ded in distributable net income. However, they can be in-
cluded in distributable net income if any of the following
Interest on estate tax. Interest paid on installment pay- apply.
ments of estate tax isn't deductible for income or estate
tax purposes. • The gain is allocated to income in the accounts of the
estate or by notice to the beneficiaries under the terms
of the will or by local law.
Depreciation and Depletion
• The gain is allocated to the corpus or principal of the
The allowable deductions for depreciation and depletion estate and is actually distributed to the beneficiaries
that accrue after the decedent's death must be appor- during the tax year.
tioned between the estate and the beneficiaries, depend- • The gain is used, under either the terms of the will or
ing on the income of the estate allocable to each. the practice of the personal representative, to deter-
An estate can't elect to treat the cost of certain mine the amount that is distributed or must be distrib-
uted.
! depreciable business assets as an expense un-
CAUTION der section 179.
• Charitable contributions are made out of capital gains.
Generally, when you determine capital gains to be in-
Example. In 2022, the decedent's estate realized
cluded in distributable net income, the exclusion for gain
$3,000 of business income during the administration of
from the sale or exchange of qualified small business
the estate. The personal representative distributed $1,000
stock isn't taken into account.
of the income to the decedent's child, Alex, and $2,000 to
the second child, Jo. The allowable depreciation on the Capital losses. Capital losses are excluded in figuring
business property is $300. Alex can take a deduction of distributable net income unless they enter into the compu-
$100 [($1,000 ÷ $3,000) × $300], and Jo can take a de- tation of any capital gain that is distributed or must be dis-
duction of $200 [($2,000 ÷ $3,000) × $300]. tributed during the year.

Separate shares rule. The separate shares rule must be
Income Distribution Deduction
used if both of the following are true.
An estate is allowed a deduction for the tax year for any • The estate has more than one beneficiary.
income that must be distributed currently and for other The economic interest of a beneficiary doesn't affect
•
amounts that are properly paid, credited, or required to be and isn't affected by the economic interest of another
distributed to beneficiaries. This deduction is limited to the beneficiary.
distributable net income of the estate.
A bequest of a specific sum of money or of property isn't a
For special rules about distributions that apply in figur- separate share (see Bequest, later).
ing the estate's income distribution deduction, see Be- If the separate shares rule applies, the separate shares
quest under Distributions to Beneficiaries, later. are treated as separate estates for the sole purpose of de-
termining the distributable net income allocable to a
Distributable net income. Distributable net income (fig- share. Each share's distributable net income is based on
ured on Form 1041, Schedule B) is the estate's taxable in- that share's portion of gross income and any applicable
come, excluding the income distribution deduction, with deductions or losses. The personal representative must
the following additional modifications. use a reasonable and equitable method to make the allo-
cations.
Tax-exempt interest. Tax-exempt interest, including Generally, gross income is allocated among the sepa-
exempt-interest dividends, is included in the distributable rate shares based on the income each share is entitled to
net income but is reduced by the following items. under the will or applicable local law. This includes gross
• Expenses not allowed in computing the estate's taxa- income not received in cash, such as a distributive share
ble income because they were attributable to tax-ex- of partnership tax items.
empt interest (see Expenses allocable to tax-exempt If a beneficiary isn't entitled to any of the estate's in-
income under Administration Expenses, earlier). come, the distributable net income for that beneficiary is
zero. The estate can't deduct any distribution made to that
• The portion of tax-exempt interest deemed to have
beneficiary and the beneficiary doesn't have to include the
been used to make a charitable contribution. See
distribution in its gross income. However, see Income in
Charitable Contributions, earlier.
respect of a decedent, later in this discussion.
The total tax-exempt interest earned by an estate must
be shown on Form 1041, Other Information, line 1. The Example. Pat's will directs you, the executor, to dis-
beneficiary's portion of the tax-exempt interest is shown tribute ABC Corporation stock and all dividends from that
on Schedule K-1 (Form 1041). stock to Pat’s child, Eli, and the residue of the estate to
Pat’s second child, Morgan. The estate has two separate
Exemption deduction. The exemption deduction isn't
shares consisting of the dividends on the stock left to Eli
allowed.
and the residue of the estate left to Morgan. The

Publication 559 (2022) Page 27

- 28 -

Page 28 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

distribution of the ABC Corporation stock qualifies as a Any other amount paid, credited, or required to be
bequest, so it isn't a separate share. distributed. Any other amount paid, credited, or required
If any distributions, other than the ABC Corporation to be distributed is included in the income distribution de-
stock, are made during the year to either Eli or Morgan, duction of the estate only in the year actually paid, credi-
you must determine the distributable net income for each ted, or distributed. If there is no specific requirement by lo-
separate share. The distributable net income for Eli's sep- cal law or by the terms of the will that income earned by
arate share includes only the dividends attributable to the the estate during administration be distributed currently, a
ABC Corporation stock. The distributable net income for deduction for distributions to the beneficiaries will be al-
Morgan's separate share includes all other income. lowed to the estate, but only for the actual distributions
during the tax year.
Income in respect of a decedent. This income is al-
located among the separate shares that could potentially If the personal representative has discretion as to when
be funded with these amounts, even if the share isn't enti- the income is distributed, the deduction is allowed only in
tled to receive any income under the will or applicable lo- the year of distribution.
cal law. This allocation is based on the relative value of
each share that could potentially be funded with these The personal representative can elect to treat distribu-
amounts. tions paid or credited within 65 days after the close of the
estate's tax year as having been paid or credited on the
Example 1. Frankie's will directs you, the executor, to last day of that tax year. The election is made by complet-
divide the residue of the estate (valued at $900,000) ing Form 1041, Other Information, line 6. If a tax return
equally between Frankie’s two children, Jamie and Ash. isn't required, the election is made on a statement filed
Under the will, you must fund Jamie’s share first with the with the IRS office where the return would have been filed.
proceeds of Frankie's traditional IRA. The $90,000 bal- The election is irrevocable for the tax year and is only ef-
ance in the IRA was distributed to the estate during the fective for the year of the election.
year. This amount is included in the estate's gross income
as income in respect of a decedent and is allocated to the Interest in real estate. The value of an interest in real
corpus of the estate. The estate has two separate shares, estate owned by a decedent, title to which passes directly
one for the benefit of Jamie and one for the benefit of Ash. to the beneficiaries under local law, isn't included as any
If any distributions are made to either Jamie or Ash during other amount paid, credited, or required to be distributed.
the year, then, for purposes of determining the distributa-
Property distributed in kind. If an estate distributes
ble net income for each separate share, the $90,000 of in-
property in kind, the estate's deduction is ordinarily the
come in respect of a decedent must be allocated only to
lesser of its basis in the property or the property's FMV
Jamie's share.
when distributed. However, the deduction is the property's
Example 2. Assume the same facts as in Example 1, FMV if the estate recognizes gain on the distribution. See
except that you must fund Jamie's share first with DEF Gain or loss on distributions in kind under Income To In-
Corporation stock valued at $300,000, instead of the IRA clude, earlier.
proceeds. To determine the distributable net income for Property is distributed in kind if it satisfies the benefi-
each separate share, the $90,000 of income in respect of ciary's right to receive another property or amount, such
a decedent must be allocated between the two shares to as the income of the estate or a specific dollar amount. It
the extent they could potentially be funded with that in- generally includes any noncash distribution other than the
come. The maximum amount of Jamie's share that could following.
be funded with that income is $150,000 ($450,000 value • A specific bequest (unless it must be distributed in
of share less $300,000 funded with stock). The maximum more than three installments).
amount of Ash's share that could be funded is $450,000.
Based on the relative values, Jamie's distributable net in- • Real property, the title to which passes directly to the
come includes $22,500 ($150,000/$600,000 x $90,000) of beneficiary under local law.
the income in respect of a decedent and Ash's distributa-
Tax-exempt income not deductible. The estate can't
ble net income includes $67,500 ($450,000/$600,000 x
take an income distribution deduction for any item of dis-
$90,000).
tributable net income not included in the estate's gross in-
Income required to be distributed currently. The in- come.
come distribution deduction includes any income that, un-
Example. An estate has distributable net income of
der the terms of the decedent's will or by reason of local
$2,000, consisting of $1,000 of dividends and $1,000 of
law, must be distributed currently. This includes an
tax-exempt interest. Distributions to the beneficiary total
amount that may be paid out of income or corpus (such as
$1,500. Except for this rule, the income distribution de-
an annuity) to the extent it is paid out of income for the tax
duction would be $1,500 ($750 of dividends and $750 of
year. The deduction is allowed to the estate even if the
tax-exempt interest). However, as the result of this rule,
personal representative doesn't make the distribution until
the income distribution deduction is limited to $750, be-
a later year or makes no distribution until the final settle-
cause no deduction is allowed for the tax-exempt interest
ment and termination of the estate.
distributed.

Page 28 Publication 559 (2022)

- 29 -

Page 29 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Denial of double deduction. A deduction can't be Foreign tax credit. The foreign tax credit is discussed in
claimed twice. If an amount is considered to have been Pub. 514, Foreign Tax Credit for Individuals.
distributed to a beneficiary of an estate in a preceding tax
year, it can't again be included in figuring the deduction for General business credit. The general business credit is
the year of the actual distribution. available to an estate involved in a business. For more in-
formation, see Pub. 334.
Example. The decedent's will provides that the estate
must distribute currently all of its income to a beneficiary. Tax
For administrative convenience, the personal representa-
tive didn't make a distribution of part of the income for the You can't use the Tax Table for individuals to figure the
tax year until the first month of the next tax year. The estate tax. You must use the tax rate schedule in the In-
amount must be deducted by the estate in the first tax structions for Form 1041 to figure the estate tax.
year, and must be included in the income of the benefi-
ciary in that year. This amount can't be deducted again by Alternative minimum tax (AMT). An estate may be lia-
the estate in the following year when it is paid to the bene- ble for the AMT. To figure the AMT, use Schedule I (Form
ficiary, nor must the beneficiary again include the amount 1041), Alternative Minimum Tax—Estates and Trusts.
in income in that year. Certain credits may be limited by any tentative minimum
tax figured on Schedule I (Form 1041), Part III, line 52,
Charitable contribution. Any amount allowed as a char- even if there is no AMT liability.
itable deduction by the estate in figuring the estate's taxa- If the estate takes a deduction for distributions to bene-
ble income can't be claimed again as a deduction for a ficiaries, complete Parts I and II of Schedule I (Form 1041)
distribution to a beneficiary. even if the estate doesn't owe AMT. Allocate the income
distribution deduction figured on a minimum tax basis
Funeral and Medical Expenses among the beneficiaries and report each beneficiary's
share on Schedule K-1 (Form 1041). Also, show each
No deduction can be taken for funeral expenses or medi- beneficiary's share of any adjustments or tax preference
cal and dental expenses on the estate's Form 1041. items for depreciation, depletion, and amortization.
For more information, see the Instructions for Sched-
Funeral expenses. Funeral expenses paid by the estate ule I (Form 1041).
aren't deductible in figuring the estate's taxable income on
Form 1041. They are deductible only for determining the Payments
taxable estate for federal estate tax purposes on Form
706.
The estate's income tax liability must be paid in full when
Medical and dental expenses of a decedent. The the return is filed. You may have to pay estimated tax,
medical and dental expenses of a decedent paid by the however, as explained below.
estate aren't deductible in figuring the estate's taxable in-
Estimated tax. Estates with tax years ending 2 or more
come on Form 1041. You can deduct them in figuring the
years after the date of the decedent's death must pay esti-
taxable estate for federal estate tax purposes on Form
mated tax in the same manner as individuals.
706. If these expenses are paid within the 1-year period
If you must make estimated tax payments for 2023, use
beginning with the day after the decedent's death, you can
Form 1041-ES, Estimated Income Tax for Estates and
elect to deduct them on the decedent's income tax return
Trusts, to determine the estimated tax to be paid.
(Form 1040 or 1040-SR) for the year in which they were
Generally, you must pay estimated tax if the estate is
incurred. See Medical Expenses under Final Income Tax
expected to owe, after subtracting any withholding and
Return for Decedent—Form 1040 or 1040-SR, earlier.
credits, at least $1,000 in tax for 2023. You won't, how-
ever, have to pay estimated tax if you expect the withhold-
Credits, Tax, and Payments ing and credits to be at least:
1. 90% of the tax to be shown on the 2023 return, or
This section includes brief discussions of some of the tax
credits, types of taxes that may be owed, and estimated 2. 100% of the tax shown on the 2022 return (assuming
tax payments reported on the estate's Form 1041. the return covered all 12 months).
The percentage in (2) above is 110% if the estate's 2022
Credits AGI was more than $150,000 (and less than / of gross 2 3
income for 2022 and 2023 is from farming or fishing). To
Estates are generally allowed some of the same tax cred- figure the estate's AGI, see the Instructions for Form 1041.
its that are allowed to individuals. The credits are gener- The general rule is that the first estimated tax payment
ally allocated between the estate and the beneficiaries. must be made by the 15th day of the 4th month of the tax
However, estates aren't allowed the credit for the elderly year (whether calendar or fiscal). The estimated tax may
or the disabled, the child tax credit, or the earned income be paid in full at that time or paid in four equal installments
credit discussed earlier under Final Income Tax Return for on the 15th day of the 4th, 6th, and 9th months of the tax
Decedent—Form 1040 or 1040-SR. year, and the 1st month of the following tax year. If any of

Publication 559 (2022) Page 29

- 30 -

Page 30 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

these dates fall on a Saturday, Sunday, or legal holiday, Form 7004 can be electronically filed. For additional infor-
the payment must be made by the next business day. For mation, see the Instructions for Form 7004.
2023, a calendar year taxpayer's estimated tax payments An extension of time to file a return doesn't extend the
are due on April 15, 2023; June 15, 2023; September 15, time for payment of tax due. The total income tax estima-
2023; and January 15, 2024. ted to be due on Form 1041 must be paid in full by the
For exceptions to the general rule, see the Instructions regular due date of the return. For additional information,
for Form 1041-ES and Pub. 505, Tax Withholding and Es- see the Instructions for Form 7004.
timated Tax.
A penalty may be charged for not paying enough esti- Where to file. The personal representative of an estate
mated tax or for not making the payment on time in the re- files the estate's income tax return (Form 1041) with the
quired amount (even if there is an overpayment on the tax Internal Revenue Service Center assigned to the state
return). Use Form 2210, Underpayment of Estimated Tax where the personal representative lives or has their princi-
by Individuals, Estates, and Trusts, to figure any penalty, pal place of business. A list of the states and assigned
or let the IRS figure the penalty. Service Centers is in the Instructions for Form 1041.
For more information, see the Instructions for Form Form 1040-NR must be filed at the following address:
1041-ES and Pub. 505. Also, see Transfer of Credit for
Department of the Treasury
Estimated Tax Payments, later, for information regarding
Internal Revenue Service
the transfer of the estate's estimated tax payments to the
Kansas City, MO 64999 USA
beneficiary(ies).
If enclosing a payment, mail Form 1040-NR to:
Name, Address, and Signature
Internal Revenue Service
In the top space of the name and address area of Form P.O. Box 1303
1041, enter the exact name of the estate used to apply for Charlotte, NC 28201-1303 USA
the estate's EIN. In the remaining spaces, enter the name
and address of the personal representative of the estate. Electronic filing. Form 1041 can be filed electroni-
cally. See the instructions for more information.
Signature. The personal representative (or its authorized
officer if the personal representative isn't an individual) Private delivery services (PDSs). Filers can use cer-
must sign the return. An individual who prepares the re- tain PDSs designated by the IRS to meet the “timely mail-
turn for pay must sign the return as preparer. You can ing as timely filing” rule for tax returns. Go to IRS.gov/PDS
check a box in the signature area that authorizes the IRS for the current list of designated services.
to contact that paid preparer for certain information. See The PDS can tell you how to get written proof of the
the Instructions for Form 1041 for more information. mailing date.
For the IRS mailing address to use if you're using a
When and Where To File PDS, go to IRS.gov/PDSStreetAddresses.
PDSs can’t deliver items to IRS P.O. boxes. You
When Form 1041 (or Form 1040-NR if it applies) is filed ! must use the U.S. Postal Service to mail any
depends on whether the personal representative chooses CAUTION items to an IRS P.O. box address.
a calendar year or a fiscal year as the estate's accounting
period. Where Form 1041 is filed depends on where the
personal representative lives or has their principal busi-
ness office. Distributions to Beneficiaries

When to file. If the calendar year is the estate's account- If you are the beneficiary of an estate that is required to
ing period, the 2022 Form 1041 is due by April 15, 2023 distribute all its income currently, you must report your
(June 15, 2023, in the case of Form 1040-NR for a non- share of the distributable net income, whether or not you
resident alien estate that doesn't have an office in the Uni- have actually received the distribution.
ted States). If the personal representative chooses a fiscal
year, Form 1041 is due by the 15th day of the 4th month If you are a beneficiary of an estate that isn't required to
(6th month for a Form 1040-NR) after the end of the tax distribute all its income currently, you must report all in-
year. If the due date is a Saturday, Sunday, or legal holi- come that is required to be distributed to you currently
day, the form must be filed by the next business day. (whether or not actually distributed), plus all other
amounts paid, credited, or required to be distributed to
Extension of time to file. An automatic 5 / -month 1 2
you, up to your share of distributable net income. As ex-
extension of time to file Form 1041 can be requested by plained earlier under Income Distribution Deduction, for
filing Form 7004, Application for Automatic Extension of an amount to be income required to be distributed cur-
Time To File Certain Business Income Tax, Information, rently, there must be a specific requirement for current
and Other Returns. The extension is automatic, so no sig- distribution either under local law or the terms of the dece-
nature or reason for the request is required. File Form dent's will. If there is no such requirement, the income is
7004 on or before the regular due date of Form 1041. reportable only when distributed.

Page 30 Publication 559 (2022)

- 31 -

Page 31 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

If the estate has more than one beneficiary, the sepa- must be included in Charlie’s gross income and $500
rate shares rule discussed earlier under Income Distribu- must be included in Jessie’s gross income.
tion Deduction may have to be used to determine the dis-
tributable net income allocable to each beneficiary. The Example 2. Assume the same facts as in Example 1,
beneficiaries in the examples shown next don't meet the except the estate has an additional $1,000 of administra-
requirements of the separate shares rule. tion expenses, commissions, etc., chargeable to corpus.
The estate's distributable net income (figured before the
charitable contribution) is now $2,000 ($3,000 − $1,000
Income That Must Be Distributed additional expense). The amount treated as currently dis-
Currently tributable income is still $2,500 ($2,000 to Charlie and
$500 to Jessie). The $2,500 treated as distributed cur-
Beneficiaries entitled to receive currently distributable in- rently is more than the $2,000 distributable net income, so
come must generally include in gross income the entire $1,600 [($2,000 ÷ $2,500) × $2,000] must be included in
amount due them. However, if the income required to be Charlie’s gross income and $400 [($500 ÷ $2,500) ×
distributed currently is more than the estate's distributable $2,000] must be included in Jessie’s gross income. Char-
net income figured without deducting charitable contribu- lie and Jessie are beneficiaries of amounts that must be
tions, each beneficiary must include in gross income a rat- distributed currently, so they don't benefit from the reduc-
able part of the distributable net income. tion of distributable net income by the charitable contribu-
tion deduction.
Example. Under the terms of the will of G. Peters,
$5,000 a year is to be paid to the surviving spouse and
$2,500 a year is to be paid to G. Peter’s child, Cameron, Other Amounts Distributed
out of the estate's income during the period of administra-
tion. There are no charitable contributions. For the year, Any other amount paid, credited, or required to be distrib-
the estate's distributable net income is only $6,000. The uted to the beneficiary for the tax year must also be inclu-
distributable net income is less than the currently distribut- ded in the beneficiary's gross income. Such an amount is
able income, so only $4,000 [($5,000 ÷ $7,500) × $6,000] in addition to those amounts that are required to be dis-
must be reported in the surviving spouse’s gross income, tributed currently, as discussed earlier. It doesn't include
and only $2,000 [($2,500 ÷ $7,500) × $6,000] must be re- gifts or bequests of specific sums of money or specific
ported in Cameron’s gross income. property if such sums are paid in three or fewer install-
ments. However, amounts that can be paid only out of in-
Annuity payable out of income or corpus. Income that come aren't excluded under this rule. If the sum of the in-
is required to be distributed currently includes any amount come that must be distributed currently and other
that must be paid out of income or corpus (principal of the amounts paid, credited, or required to be distributed ex-
estate) to the extent the amount is satisfied out of income ceeds distributable net income, these other amounts are
for the tax year. An annuity that must be paid in all events included in the beneficiary's gross income only to the ex-
(either out of income or corpus) would qualify as income tent distributable net income exceeds the income that
that is required to be distributed currently to the extent must be distributed currently. If there is more than one
there is income of the estate not paid, credited, or re- beneficiary, each will include in gross income only a pro
quired to be distributed to other beneficiaries for the tax rata share of such amounts.
year.
The personal representative can elect to treat distribu-
Example 1. H. Frank's will provides that $500 be paid tions paid or credited by the estate within 65 days after the
to the local Community Chest out of income each year. It close of the estate's tax year as having been paid or credi-
also provides that $2,000 a year is currently distributable ted on the last day of that tax year.
out of income to H. Frank’s sibling, Charlie, and an annuity
of $3,000 is to be paid to H. Frank’s other sibling, Jessie, The following are examples of other amounts distrib-
out of income or corpus. Capital gains are allocable to cor- uted.
pus, but all expenses are to be charged against income. Distributions made at the discretion of the personal
•
Last year, the estate had income of $6,000 and expenses representative.
of $3,000. The personal representative paid $500 to the
Community Chest and made the distributions to Charlie • Distributions required by the terms of the will when a
and Jessie as required by the will. specific event occurs.
The estate's distributable net income (figured before • Annuities that must be paid in any event, but only out
the charitable contribution) is $3,000. The currently dis- of corpus (principal).
tributable income totals $2,500 ($2,000 to Charlie and
$500 to Jessie). The income available for Jessie’s annuity • Distributions of property in kind as defined earlier un-
is only $500 because the will requires that the charitable der Income Distribution Deduction, under Income Tax
contribution be paid out of current income. The $2,500 Return of an Estate—Form 1041.
treated as distributed currently is less than the $3,000 dis- • Distributions required for the support of the decedent's
tributable net income (before the contribution), so $2,000 surviving spouse or other dependent for a limited pe-
riod, but only out of corpus (principal).

Publication 559 (2022) Page 31

- 32 -

Page 32 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

If an estate distributes property in kind, the amount of Example 1. An estate has distributable net income of
the distribution is ordinarily the lesser of the estate's basis $3,000, consisting of $1,800 in rents and $1,200 in taxa-
in the property or the property's FMV when distributed. ble interest. There is no provision in the will or local law for
However, the amount of the distribution is the property's the allocation of income. The personal representative dis-
FMV if the estate recognizes gain on the distribution. See tributes $1,500 each to Harper and Drew, beneficiaries in
Gain or loss on distributions in kind in the discussion In- their parent’s will. Each will be treated as having received
come To Include, earlier. $900 in rents and $600 of taxable interest.

Example. The terms of M. Scott's will require the dis- Example 2. Assume in Example 1 that the will pro-
tribution of $2,500 of income annually to M. Scott’s vides for the payment of the taxable interest to Harper and
spouse, Reese. If any income remains, it may be accumu- the rental income to Drew and that the personal represen-
lated or distributed to M. Scott’s two children, Joe and tative distributed the income under those provisions.
Alex, in amounts at the discretion of the personal repre- Harper is treated as having received $1,200 in taxable in-
sentative. The personal representative may also invade terest and Drew is treated as having received $1,800 of
the corpus (principal) for the benefit of M. Scott's spouse rental income.
and children.
Last year, the estate had income of $6,000 after deduc- Charitable contribution made. If a charitable contribu-
tion of all expenses. Its distributable net income is also tion is made by an estate and the terms of the will or local
$6,000. The personal representative distributed the re- law provide for the contribution to be paid from specified
quired $2,500 of income to Reese. In addition, the per- sources, that provision governs. If no provision or require-
sonal representative distributed $1,500 each to Joe and ment exists, the charitable contribution deduction must be
Alex and an additional $2,000 to Reese. allocated among the classes of income entering into the
Reese includes $2,500 of currently distributable in- computation of the income of the estate before allocation
come in gross income. The other amounts distributed to- of other deductions among the items of distributable net
taled $5,000 ($1,500 + $1,500 + $2,000) and are includi- income. In allocating items of income and deductions to
ble in the incomes of Reese, Joe, and Alex to the extent of beneficiaries to whom income must be distributed cur-
$3,500 (distributable net income of $6,000 minus currently rently, the charitable contribution deduction isn't taken into
distributable income to Reese of $2,500). Reese will in- account to the extent that it exceeds income for the year
clude an additional $1,400 [($2,000 ÷ $5,000) × $3,500] in reduced by currently distributable income.
gross income. Joe and Alex each will include $1,050
Example. The will of H. Thomas requires a current dis-
[($1,500 ÷ $5,000) × $3,500] in their gross incomes.
tribution from income of $3,000 a year to H. Thomas’s
spouse, Kai, during the administration of the estate. The
Discharge of a Legal Obligation will also provides that the personal representative, using
discretion, may distribute the balance of the current earn-
If an estate, under the terms of a will, discharges a legal ings either to H. Thomas's child, Avery, or to one or more
obligation of a beneficiary, the discharge is included in designated charities. Last year, the estate's income con-
that beneficiary's income as either currently distributable sisted of $4,000 of taxable interest and $1,000 of tax-ex-
income or other amount paid. This doesn't apply to the empt interest. There were no deductible expenses. The
discharge of a beneficiary's obligation to pay alimony or personal representative distributed the $3,000 to Kai,
separate maintenance. made a contribution of $2,500 to the local heart associa-
tion, and paid $1,500 to Avery.
The beneficiary's legal obligations include a legal obli- The distributable net income for determining the char-
gation of support, for example, of a minor child. Local law acter of the distribution to Kai is $3,000. The charitable
determines a legal obligation of support. contribution deduction to be taken into account for this
computation is $2,000 (the estate's income ($5,000) mi-
Character of Distributions nus the currently distributable income ($3,000)). The
$2,000 charitable contribution deduction must be alloca-
An amount distributed to a beneficiary for inclusion in ted: $1,600 [($4,000 ÷ $5,000) × $2,000] to taxable inter-
gross income retains the same character for the benefi- est and $400 [($1,000 ÷ $5,000) × $2,000] to tax-exempt
ciary that it had for the estate. interest. Kai is considered to have received $2,400
($4,000 − $1,600) of taxable interest and $600 ($1,000 −
No charitable contribution made. If no charitable con- $400) of tax-exempt interest. Kai must include the $2,400
tribution is made during the tax year, treat the distributions in gross income and must report the $600 of tax-exempt
as consisting of the same proportion of each class of interest, but it isn't taxable.
items entering into the computation of distributable net in- To determine the amount to be included in Avery's
come as the total of each class bears to the total distribut- gross income, however, take into account the entire chari-
able net income. Distributable net income was defined table contribution deduction. The currently distributable in-
earlier under Income Distribution Deduction, under In- come is greater than the estate's income after taking into
come Tax Return of an Estate—Form 1041. However, if account the charitable contribution deduction, so none of
the will or local law specifically provides or requires a dif- the amount paid to Avery must be included in Avery’s
ferent allocation, use that allocation. gross income for the year.

Page 32 Publication 559 (2022)

- 33 -

Page 33 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

How and When To Report year ended. However, for a cash basis beneficiary, the
gross income of the last tax year includes only the
How income from the estate is reported depends on the amounts actually distributed before death. Income that
character of the income in the hands of the estate. When must be distributed to the beneficiary but, in fact, is distrib-
the income is reported depends on whether it represents uted to the beneficiary's estate after death is included in
amounts credited or required to be distributed to benefi- the gross income of the beneficiary's estate as income in
ciaries or other amounts. respect of a decedent.
How to report estate income. Each item of income Termination of nonindividual beneficiary. If a ben-
keeps the same character in the hands of a beneficiary as eficiary that isn't an individual, for example, a trust or a
it had in the hands of the estate. If the items of income dis- corporation, ceases to exist, the amount included in its
tributed or considered to be distributed include dividends, gross income for its last tax year is determined as if the
tax-exempt interest, or capital gains, they will keep the beneficiary were a deceased individual. However, income
same character in the beneficiary's hands for purposes of that must be distributed before termination, but which is
the tax treatment given those items. Generally, a benefi- actually distributed to the beneficiary's successor in inter-
ciary reports dividends on Form 1040 or 1040-SR, line 3b, est, is included in the gross income of the nonindividual
and capital gains on Schedule D (Form 1040). The tax-ex- beneficiary for its last tax year.
empt interest, while not included in taxable income, must
Schedule K-1 (Form 1041). The personal representa-
be shown on Form 1040 or 1040-SR, line 2a. Report busi-
tive of the estate must provide the beneficiary with a copy
ness and other nonpassive income in Part III of Sched-
of Schedule K-1 (Form 1041) or a substitute Sched-
ule E (Form 1040), Supplemental Income and Loss.
ule K-1. The beneficiary shouldn't file Schedule K-1 (Form
The estate's personal representative must provide the
1041) with the beneficiary’s Form 1040 or 1040-SR, but
beneficiary with the classification of the various items that
should keep it for their personal records.
make up the beneficiary’s share of the estate income and
Each beneficiary (or nominee of a beneficiary) who re-
the credits the beneficiary takes into consideration to
ceives a distribution from the estate for the tax year or to
properly prepare the beneficiary’s individual income tax
whom any item is allocated must receive a Schedule K-1
return. See Schedule K-1 (Form 1041), later.
(Form 1041) or substitute. The personal representative
When to report estate income. If income from the es- must furnish the form to each beneficiary or nominee by
tate is credited or must be distributed to a beneficiary for a the date on which the Form 1041 is filed.
tax year, the beneficiary reports that income (even if not Nominees. A person who holds an interest in an es-
distributed) on the return for that year. The personal repre- tate as a nominee for a beneficiary must provide the es-
sentative can elect to treat distributions paid or credited tate with the name and address of the beneficiary, and
within 65 days after the close of the estate's tax year as any other required information. The nominee must provide
having been paid or credited on the last day of that tax the beneficiary with the information received from the es-
year. If this election is made, the beneficiary must report tate.
that distribution on the beneficiary’s return for that year.
Other income from the estate is reported on the benefi- Penalty. A personal representative (or nominee) who
ciary’s return for the year in which it was received. If the fails to provide the correct information may be subject to a
beneficiary's tax year is different from the estate's tax $290 penalty for each failure. If it is shown that such fail-
year, see Different tax years next. ure is due to intentional disregard of the filing requirement,
the penalty amount increases.
Different tax years. Each beneficiary must include
their share of the estate income in the beneficiary’s return Consistent treatment of items. Beneficiaries must
for the tax year in which the last day of the estate's tax treat estate items the same way on their individual returns
year falls. If the tax year of the estate is a fiscal year end- as those items are treated on the estate's income tax re-
ing on June 30, 2022, and the beneficiary's tax year is the turn. If their treatment is different from the estate's treat-
calendar year, the beneficiary will include in gross income ment, the beneficiary must file Form 8082, Notice of In-
for the tax year ending December 31, 2022, their share of consistent Treatment or Administrative Adjustment
the estate's distributable net income distributed or re- Request (AAR), with the beneficiary’s return to identify the
quired to be distributed during the fiscal year ending the difference. If the beneficiary doesn't file Form 8082 and
previous June 30. the estate has filed a return, the IRS can immediately as-
sess and collect any tax and penalties that result from ad-
Death of individual beneficiary. If an individual ben- justing the item to make it consistent with the estate's
eficiary dies, the beneficiary's share of the estate's distrib- treatment.
utable net income may be distributed or be considered
distributed by the estate for its tax year that doesn't end
Bequest
with or within the last tax year of the beneficiary. In this
case, the estate income that must be included in the gross A bequest is the act of giving or leaving property to an-
income on the beneficiary's final return is based on the other through the last will and testament. Generally, any
amounts distributed or considered distributed during the distribution of income (or property in kind) to a beneficiary
tax year of the estate in which the beneficiary’s last tax is an allowable deduction to the estate and is includible in

Publication 559 (2022) Page 33

- 34 -

Page 34 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

the beneficiary's gross income to the extent of the estate's bequests, that residuary bequest isn't a payment of spe-
distributable net income. However, a distribution won't be cific property or a sum of money.
an allowable deduction to the estate and won't be includi-
Gifts made in installments. Even if the gift or be-
ble in the beneficiary's gross income if the distribution
quest is made in a lump sum or in three or fewer install-
meets all the following requirements.
ments, it won't qualify as specific property or a sum of
• It is required by the terms of the will. money if the will provides that the amount must be paid in
• It is a gift or bequest of a specific sum of money or more than three installments.
property.
Conditional bequests. A bequest of specific property or
• It is paid out in three or fewer installments under the a sum of money that may otherwise be excluded from the
terms of the will. beneficiary's gross income won't lose the exclusion solely
because the payment is subject to a condition.
Specific sum of money or property. To meet this test,
the amount of money or the identity of the specific prop- Installment payments. Certain rules apply in determin-
erty must be determinable under the decedent's will as of ing whether a bequest of specific property or a sum of
the date of death. To qualify as specific property, the money has to be paid or credited to a beneficiary in more
property must be identifiable both as to its kind and its than three installments.
amount.
Personal items. Don't take into account bequests of
Example 1. D. Rogers' will provided that D. Roger’s articles for personal use, such as personal and household
child, Taylor, receive D. Rogers’ interest in the Rog- effects and automobiles.
ers-Jones partnership. D. Rogers’ other child, Angel, Real property. Don't take into account specifically
would receive a sum of money equal to the value of the designated real property, the title to which passes under
partnership interest given to Taylor. The bequest to Taylor local law directly to the beneficiary.
is a gift of a specific property ascertainable at the date of
D. Rogers' death. The bequest of a specific sum of money Other property. All other bequests under the dece-
to Angel is determinable on the same date. dent's will for which no time of payment or crediting is
specified and that are to be paid or credited in the ordinary
Example 2. M. Jenkins' will provided that the surviving course of administration of the estate are considered as
spouse, Riley, would receive money or property to be se- required to be paid or credited in a single installment.
lected by the personal representative equal in value to half Also, all bequests payable at any one specified time under
of M. Jenkins’ adjusted gross estate. The identity of the the terms of the will are treated as a single installment.
property and the money in the bequest are dependent on
Testamentary trust. In determining the number of in-
the personal representative's discretion and the payment
stallments that must be paid or credited to a beneficiary,
of administration expenses and other charges, which
the decedent's estate and a testamentary trust created by
aren't determinable at the date of M. Jenkins’ death. As a
the decedent's will are treated as separate entities.
result, the provision isn't a bequest of a specific sum of
Amounts paid or credited by the estate and by the trust
money or of specific property, and any distribution under
are counted separately.
that provision is a deduction for the estate and income to
the beneficiary (to the extent of the estate's distributable
net income). The fact that the bequest will be specific Termination of Estate
sometime before distribution is immaterial. It isn't ascer-
tainable by the terms of the will as of the date of death. The termination of an estate is generally marked by the
end of the period of administration and by the distribution
Distributions not treated as bequests. The following of the assets to the beneficiaries under the terms of the
distributions aren't bequests that meet all the require- will or under the laws of succession of the state if there is
ments listed earlier that allow a distribution to be excluded no will. These beneficiaries may or may not be the same
from the beneficiary's income and don't allow it as a de- persons as the beneficiaries of the estate's income.
duction to the estate.
Period of Administration
Paid only from income. An amount that can be paid
only from current or prior income of the estate doesn't The period of administration is the time actually required
qualify even if it is specific in amount and there is no provi- by the personal representative to assemble all the dece-
sion for installment payments. dent's assets, pay all the expenses and obligations, and
Annuity. An annuity or a payment of money or of spe- distribute the assets to the beneficiaries. This may be lon-
cific property in lieu of, or having the effect of, an annuity ger or shorter than the time provided by local law for the
isn't the payment of specific property or a sum of money. administration of estates.

Residuary estate. If the will provides for the payment Ends if all assets distributed. If all assets are distrib-
of the balance or residue of the estate to a beneficiary of uted except a reasonable amount set aside, in good faith,
the estate after all expenses and other specific legacies or for the payment of unascertained or contingent liabilities

Page 34 Publication 559 (2022)

- 35 -

Page 35 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

and expenses (but not including a claim by a beneficiary, the beneficiaries, a return must be filed for the estate
as a beneficiary), the estate will be considered terminated. along with a schedule showing the computation of each
kind of deduction and the allocation of each to the benefi-
Ends if period unreasonably long. If settlement is pro- ciaries.
longed unreasonably, the estate will be treated as termi- Under Final Regulations - TD9918, each excess de-
nated for federal income tax purposes. From that point on, duction on termination of an estate or trust retains its sep-
the income, deductions, and credits of the estate are con- arate character as an amount allowed in arriving at AGI, a
sidered those of the person or persons succeeding to the non-miscellaneous itemized deduction, or a miscellane-
property of the estate. ous itemized deduction. For more information, see the In-
structions for Form 1041.
Transfer of Unused Deductions to
No double deductions. An NOL deduction allowable
Beneficiaries to a successor beneficiary can't be considered in figuring
the excess deductions on termination. However, if the es-
If the estate has unused loss carryovers or excess deduc- tate's last tax year is the last year in which a deduction for
tions for its last tax year, they are allowed to those benefi- an NOL can be taken, the deduction, to the extent not ab-
ciaries who succeed to the estate's property. See Succes- sorbed in the last return of the estate, is treated as an ex-
sor beneficiary, later. cess deduction on termination. Any item of income or de-
Note. See Notice 2018-61 and Regulations section duction, or any part thereof, taken into account in figuring
1.67-4 for more information about allowable beneficiary an NOL or a capital loss carryover of the estate for its last
deductions. tax year can't be used again to figure the excess deduc-
tion on termination.
Unused loss carryovers. An unused NOL carryover or
capital loss carryover existing upon termination of the es- Successor beneficiary. A beneficiary entitled to an un-
tate is allowed to the beneficiaries succeeding to the prop- used loss carryover or an excess deduction is the benefi-
erty of the estate. That is, these deductions will be ciary who, upon the estate's termination, bears the burden
claimed on the beneficiary's tax return. This treatment oc- of any loss for which a carryover is allowed or of any de-
curs only if a carryover would have been allowed to the ductions more than gross income.
estate in a later tax year if the estate had not been termi- If decedent had no will. If the decedent had no will,
nated. the beneficiaries are those heirs or next of kin to whom the
Both types of carryovers generally keep their same estate is distributed. If the estate is insolvent, the benefi-
character for the beneficiary as they had for the estate. ciaries are those to whom the estate would have been dis-
However, if the beneficiary of a capital loss carryover is a tributed had it not been insolvent. If the decedent's
corporation, the corporation will treat the carryover as a spouse is entitled to a specified dollar amount of property
short-term capital loss regardless of its status in the es- before any distributions to other heirs and the estate is
tate. The NOL carryover and the capital loss carryover are less than that amount, the spouse is the beneficiary to the
used in figuring the beneficiary's AGI and taxable income. extent of the deficiency.
The beneficiary may have to adjust any NOL carryover in
figuring the AMT. If decedent had a will. If the decedent had a will, a
The first tax year to which the loss is carried is the ben- beneficiary normally means the residuary beneficiaries
eficiary's tax year in which the estate terminates. If the (including residuary trusts). Those beneficiaries who re-
loss can be carried to more than 1 tax year, the estate's ceive specific property or a specific amount of money
last tax year (whether or not a short tax year) and the ben- aren’t ordinarily considered residuary beneficiaries, ex-
eficiary's first tax year to which the loss is carried each cept to the extent the specific amount isn't paid in full.
constitute a tax year for figuring the number of years to Also, a beneficiary who isn't strictly a residuary benefi-
which a loss may be carried. A capital loss carryover from ciary, but whose devise or bequest is determined by the
an estate to a corporate beneficiary will be treated as value of the estate as reduced by the loss or deduction, is
though it resulted from a loss incurred in the estate's last entitled to the carryover or the deduction. This includes
tax year (whether or not a short tax year), regardless of the following beneficiaries.
when the estate actually incurred the loss. • A beneficiary of a fraction of the decedent's net estate
If the last tax year of the estate is the last tax year to after payment of debts, expenses, and specific be-
which an NOL may be carried, see No double deductions, quests.
later. For a general discussion of NOLs, see Pub. 536. For
a discussion of capital losses and capital loss carryovers, • A nonresiduary beneficiary, when the estate is unable
to satisfy the bequest in full.
see Pub. 550.
• A surviving spouse receiving a fractional share of the
Excess deductions. If the deductions in the estate's last estate in fee under a statutory right of election when
tax year (other than the exemption deduction or the chari- the losses or deductions are taken into account in de-
table contributions deduction) are more than gross in- termining the share. However, such a beneficiary
come for that year, the beneficiaries succeeding to the es- doesn't include a recipient of a dower or curtesy, or a
tate's property can claim the excess as a deduction in beneficiary who receives any income from the estate
figuring taxable income. To establish these deductions for

Publication 559 (2022) Page 35

- 36 -

Page 36 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

from which the loss or excess deduction is carried Generation-Skipping Transfer) Tax Return, Estate of non-
over. resident not a citizen of the United States; and the related
instructions. This publication also doesn't contain any in-
Allocation among beneficiaries. The total of the un- formation about state or local taxes. That information
used loss carryovers or the excess deductions on termi- should be available from your state and local taxing au-
nation that may be deducted by the successor beneficia- thority.
ries is to be divided according to the share of each in the
burden of the loss or deduction.
The discussion below is to give you a general under-
Example. Under the parent’s will, Ash is to receive standing of when estate, gift, and GST taxes apply and
$20,000. The remainder of the estate is to be divided when they don't. It explains how much money or property
equally between Ash’s siblings, Danny and Robin. After all can be given away during life or left to heirs at death be-
expenses are paid, the estate has sufficient funds to pay fore any tax will be owed. If the decedent gave someone
Ash only $15,000, with nothing to Danny and Robin. In the money or property during the decedent’s life, the personal
estate's last tax year, there are excess deductions of representative may have to pay the federal gift tax on be-
$5,000 and $10,000 of unused loss carryovers. The total half of the decedent if it wasn't previously paid. The
of the excess deductions and unused loss carryovers is money and property owned by the decedent at death is
$15,000 and Ash is considered a successor beneficiary to the estate and may be subject to federal estate tax. This is
the extent of $5,000, so Ash is entitled to one-third of the in addition to any federal income tax that is owed on the
unused loss carryover and one-third of the excess deduc- gross income of the estate.
tions. Ash’s siblings may divide the other two-thirds of the Most gifts aren't subject to the gift tax and most estates
excess deductions and the unused loss carryovers be- aren't subject to the estate tax. For example, there is usu-
tween them. ally no tax if a gift is given to a spouse or charity or if the
estate goes to the decedent’s spouse or charity at death.
Transfer of Credit for Estimated Tax If gifts are made to someone else, the gift tax usually
Payments doesn't apply until the value exceeds the annual exclusion
for the year. See Annual exclusion under Gift Tax, later.
When an estate terminates, the personal representative Even if the gift or estate tax applies, it may be eliminated
can elect to transfer to the beneficiaries the credit for all or by the applicable credit amount, discussed later.
part of the estate's estimated tax payments for the last tax
year. To make this election, the personal representative Person receiving the gift or bequest. Generally, the
must complete Form 1041-T, Allocation of Estimated Tax person who receives a gift or bequest of property from an
Payments to Beneficiaries, and file it either separately or estate won't have to pay any federal gift tax or estate tax.
with the estate's final Form 1041. The Form 1041-T must Also, that person won't have to pay income tax on the
be filed by the 65th day after the close of the estate's tax value of the gift or inheritance received.
year.
Note. Gifts or bequests received from covered expatri-
Filing Form 1041-T with Form 1041 doesn't ates after June 16, 2008, may be subject to a tax which
! change the due date for filing Form 1041-T. The must be paid by the recipient. Consult a qualified tax pro-
CAUTION IRS will reject a late-filed election. If Form 1041-T fessional for more information.
is rejected and Form 1041 was filed based on a success-
ful election, then the personal representative must file an No income tax deduction. Making a gift or leaving prop-
amended Form 1041, including amended Schedule(s) erty from an estate to heirs doesn't ordinarily affect federal
K-1. income tax liability. The value of gifts made (other than
gifts that are charitable contributions) or any federal gift
The estimated tax allocated to each beneficiary is trea- tax resulting from making those gifts can't be deducted
ted as paid or credited to the beneficiary on the last day of from income tax liability. The value of any bequests made
the estate's final tax year and must be reported in box 13 or estate tax resulting from making bequests is also not
of Schedule K-1 (Form 1041), using code A. If the estate deductible from income tax liability.

terminated in 2022, this amount is treated as a payment of Filing requirements. For estate tax purposes, the per-
2022 estimated tax made by the beneficiary on January sonal representative may be required to file Form 706. If
15, 2023. death occurred in 2022, Form 706 must be filed if the
gross estate of the decedent, plus any adjusted taxable
gifts and specific gift tax exemption, is valued at more
Estate and Gift Taxes than $12,060,000. Form 706 must also be timely filed if
the estate elects to transfer any DSUE to a surviving
This publication doesn't contain all the rules and spouse (this is also known as the portability election), re-
! exceptions for federal estate, gift, or genera- gardless of the size of the gross estate.
CAUTION tion-skipping transfer (GST) taxes, nor does it
If Form 706 is required, the return and payment of any
contain all the rules that apply to nonresident noncitizens. tax is due within 9 months after the date of the decedent’s
If you need more information, see Form 709; Form 706; death. To apply for an extension of time to file the return
Form 706-NA, United States Estate (and

Page 36 Publication 559 (2022)

- 37 -

Page 37 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

and/or pay the tax due, use Form 4768, Application for equal the tax on the basic exclusion amount plus the tax
Extension of Time To File a Return and/or Pay U.S. Estate on any DSUE amount.
(and Generation-Skipping Transfer) Taxes, to apply for an For examples of how the credit works, see Applying the
automatic 6-month extension of time to file. applicable credit to gift tax and Applying the applicable
An executor can only elect to transfer the DSUE credit to estate tax, later.
amount to the surviving spouse if the Form 706 is filed
timely; that is, within 9 months of the decedent's date of Restored exclusion and GST exemption amounts. If
death or, if you have received an extension of time to file, a decedent made a taxable gift during the decedent's life-
before the 6-month extension period ends. time to the decedent's same-sex spouse and that transfer
resulted in a reduction of the decedent's available applica-
Note. Executors who did not have a filing requirement ble exclusion amount, there is a new procedure allowing
under section 6018(a) but failed to timely file Form 706 to the decedent to restore the exclusion that was utilized in
make the portability election may be eligible for an exten- the transfer. If a decedent made a taxable gift during the
sion under Rev. Proc. 2022-32, 2022-30 I.R.B. 101 (su- decedent's lifetime to a skip person whose generation as-
perseding Rev. Proc. 2017-34, 2017-26 I.R.B. 1282). Ex- signment is changed as a result of Notice 2017-15, any
ecutors filing to elect portability may now file Form 706 on GST exemption amount allocated to the gift will be
or before the fifth anniversary of the decedent's death. deemed void. For more information, see the Instructions
The federal gift tax return, Form 709, is filed for every for Form 706 and Notice 2017-15, 2017-06 I.R.B. 783.
year in which a gift is made. However, a gift tax return isn’t
generally required unless money or property worth more Gift Tax
than the annual exclusion for that year is given to some-
one other than the decedent’s spouse or the gift given isn't The gift tax applies to lifetime transfers of property from
subject to the annual exclusion. The annual gift exclusion one person (the donor) to another person (the donee). A
is $16,000 for 2022. See Annual exclusion, later, for more gift is made if tangible or intangible property (including
information. money), the use of property, or the right to receive income
Generally, you must file Form 709 by April 15 of the from property is given without expecting to receive some-
year after the gift was made. An extension of time to file thing of at least equal value in return. If something is sold
the return is available by filing Form 8892, Application for for less than its full value or if a loan is made without inter-
Automatic Extension of Time To File Form 709 and/or est or with reduced (less than market rate) interest, a gift
Payment of Gift/Generation-Skipping Transfer Tax. may have been made.
Note. Any extension of time granted for filing an indi- The general rule is that any gift is a taxable gift. How-
vidual tax return will also automatically extend the time to ever, there are many exceptions to this rule.
file your gift tax return. An income tax return extension is Generally, the following gifts aren't taxable gifts.
made on Form 4868, Application for Automatic Extension
of Time To File U.S. Individual Income Tax Return. • Gifts, excluding gifts of future interests, that aren't
more than the annual exclusion for the calendar year.
Basic exclusion amount. The basic exclusion amount
• Tuition or medical expenses paid directly to an educa-
for decedents who died in 2022 is $12,060,000.
tional or medical institution for someone else.
Beginning in 2011, a predeceased spouse's unused
exclusion, the DSUE amount, may be added to the basic • Gifts to your spouse, if your spouse is a U. S. citizen.
exclusion amount to determine the applicable exclusion • Gifts to a political organization for its use.
amount. The DSUE amount is only available if an election
is made on the Form 706 filed by the predeceased spou- • Gifts to certain exempt organizations described in
se’s estate. section 501(c)(4), 501(c)(5), and 501(c)(6).
The total of the basic exclusion amount and any DSUE • Gifts to charities.
amount received from the estate of a predeceased
spouse is the applicable exclusion amount. This amount Annual exclusion. A separate annual exclusion applies
may be applied against tax due on lifetime gifts and/or to each person to whom a gift is made. The gift tax annual
transfers at death. exclusion is subject to cost-of-living increases.

Applicable credit amount. A credit is an amount that re-
duces or eliminates tax. The applicable credit applies to
both the gift tax and the estate tax and it equals the tax on
the applicable exclusion amount. The applicable credit
must be subtracted from any gift or estate tax owed. Any
applicable credit used against gift tax in 1 year reduces
the amount of credit that can be used against gift or estate
taxes in a later year.
In 2022, the credit on the basic exclusion amount is
$4,769,800 (exempting $12,060,000 from tax). The total
amount of applicable credit available to a person will

Publication 559 (2022) Page 37

- 38 -

Page 38 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Gift Tax Annual Exclusion Example. Jaden and Jaden’s spouse, Sammy, agreed
to split the gifts that they made during 2022. Jaden’s sib-
Year(s) Annual Exclusion ling’s child, Morgan, received $21,000 from Jaden. Sam-
my’s sibling’s child, Jo, received $18,000 from Sammy.
2002 – 2005 $11,000 Although each gift is more than the annual exclusion
2006 – 2008 $12,000 ($16,000), by gift splitting, they made these gifts without
2009 – 2012 $13,000 making a taxable gift. Jaden’s gift to Morgan is treated as
one-half ($10,500) from Jaden and one-half ($10,500)
2013 – 2017 $14,000
from Sammy. Sammy’s gift to Jo is also treated as
2018 – 2021 $15,000 one-half ($9,000) from Sammy and one-half ($9,000) from
2022 $16,000 Jaden. In each case, because one-half of the split gift isn't
more than the annual exclusion, it isn't a taxable gift. How-
In 2022, generally, gifts valued up to $16,000 per per- ever, each of them must file a gift tax return.
son could have been given to any number of people, and
none of the gifts will be taxable. If the decedent's spouse Applying the applicable credit to gift tax. After you
is not a U. S. citizen, the annual exclusion for gifts made to determine which gifts are taxable, figure the amount of gift
the decedent’s spouse in 2022 is $164,000. However, tax on the total taxable gifts and apply the applicable
gifts of future interests can't be excluded under the annual credit for the year.
exclusion. A gift of a future interest is a gift that is limited Example. In 2022, the decedent gave the following
so that its use, possession, or enjoyment will begin at gifts and amounts to the following people.
some point in the future. If the decedent was married, both
the decedent and spouse could have separately given • Morgan, a relative, a cash gift of $8,000. It is the dece-
gifts valued up to $16,000 to the same person without dent’s only gift to Morgan this year.
making a taxable gift. If one spouse gave a gift valued at • Danny, a friend, the decedent paid the $16,000 col-
more than the $16,000 exclusion, see Gift splitting, later. lege tuition.
Example 1. The decedent gave Madison, a relative, a • Avery, 25-year-old child, $26,000.
cash gift of $8,000. It is the decedent’s only gift to Madi-
son in 2022. The gift isn't a taxable gift because it isn't • Kai, 27-year-old child, $26,000.
more than the $16,000 annual exclusion. The decedent never gave a taxable gift before and
doesn't have any DSUE. Apply the exceptions to the gift
Example 2. The decedent paid the $16,000 college
tax and the applicable credit as follows.
tuition of a friend directly to the friend’s college. Because
the payment qualifies for the educational exclusion, the 1. Apply the educational exclusion. Payment of tuition
gift isn't a taxable gift. expenses isn't subject to the gift tax. Therefore, the
gift to Danny isn't a taxable gift.
Example 3. The decedent gave $26,000 to the dece-
dent’s 25-year-old child. The first $16,000 of the gift isn't 2. Apply the annual exclusion. The first $16,000 given
subject to the gift tax because of the annual exclusion. isn't a taxable gift. Therefore, the $8,000 gift to Mor-
The remaining $10,000 is a taxable gift. As explained later gan, the first $16,000 of the gift to Avery, and the first
under Applying the applicable credit to gift tax, the estate $16,000 of the gift to Kai aren't taxable gifts.
may not have to pay the gift tax on the remaining $10,000.
3. Apply the applicable credit. The gift tax on $20,000
However, a gift tax return must be filed.
($10,000 remaining from the gift to Avery plus
More information. See Form 709 and its instructions for $10,000 remaining from the gift to Kai) is $3,800.
more information about taxable gifts. Subtract the $3,800 from the applicable credit of
$4,769,800 for 2022. The applicable credit that can
Gift splitting. If the decedent or the decedent’s spouse be used against the gift or estate tax in a later year is
made a gift to a third party, the gift can be considered as $4,766,000.
made one-half by the decedent and one-half by the dece-
As the personal representative of the decedent's es-
dent’s spouse. This is known as gift splitting. Both spou-
tate, you don't have to pay any gift tax for 2022. However,
ses must be U. S. citizens or residents, must agree to split
you do have to file Form 709.
the gift, and, in the case of a deceased spouse, the per-
For more information, see the Table for Computing Gift
sonal representative will act on behalf of the decedent. If
Tax in the Instructions for Form 709.
there is consent to split the gift, both spouses can apply
the annual exclusion to one-half of the gift. For gifts made Filing a gift tax return. Generally, a gift tax return must
in 2022, gift splitting allows married couples to give up to be filed if any of the following apply.
$32,000 to a person without making a taxable gift. If a gift
is split, both spouses must file a gift tax return to show an • Gifts were given to at least one person (other than the
agreement to use gift splitting. Form 709 must be filed decedent’s spouse) that are more than the annual ex-
even if half of the split gift is less than the annual exclu- clusion for the year.
sion. • The decedent and the decedent’s spouse split a gift.

Page 38 Publication 559 (2022)

- 39 -

Page 39 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

• The decedent gave someone (other than decedent’s More information. For more information on what is inclu-
spouse) a gift of a future interest that the recipient ded in the gross estate and the allowable deductions, see
can't actually possess, enjoy, or receive income from Form 706 and Form 706-NA and their instructions.
until some time in the future.
Applying the applicable credit to estate tax. Basically,
• The decedent gave the decedent’s spouse an interest any applicable credit not used to eliminate gift tax can be
in property that will be ended by some future event. used to eliminate or reduce estate tax. However, to deter-
A gift tax return doesn't have to be filed to report gifts to mine the applicable credit available for use against the es-
(or for the use of) political organizations or gifts made by tate tax, you must complete Form 706.
paying someone’s tuition or medical expenses.
The following deductible gifts made to charities also Filing an estate tax return. An estate tax return must be
don't need to be reported. filed if the gross estate, plus any adjusted taxable gifts
and specific gift tax exemption, is more than the basic ex-
• An entire interest in property, if no other interest has clusion amount. The basic exclusion amount is generally
been transferred for less than adequate consideration equal to the filing requirement. For 2022, the basic exclu-
or for other than a charitable use. sion amount is $12,060,000.
• A qualified conservation contribution that is a perpet-
ual restriction on the use of real property. Note. The federal estate tax return doesn’t generally
need to be filed unless the total value of lifetime transfers
More information. If you think you need to file a gift tax and the estate is worth more than the basic exclusion
return, see Form 709 and its instructions for more informa- amount for the year of death. However, a complete and
tion. You can get publications and forms at IRS.gov/ timely filed return is required if a deceased spouse’s es-
Forms. You may want to speak with a qualified tax profes- tate elects portability of any unused exclusion amount for
sional to receive help with gift tax questions. use by the surviving spouse.
Adjusted taxable gifts is the total of the taxable gifts
made by the decedent after 1976 that aren't included in
Estate Tax
the gross estate.
Estate tax may apply to the decedent's taxable estate at
Note. The specific gift tax exemption applies only to
death. The taxable estate is the gross estate less allowa-
gifts made after September 8, 1976, and before January
ble deductions.
1, 1977.
Gross estate. The gross estate includes the value of all The applicable exclusion amount is the total amount
property the decedent owns partially or in full at the time of exempted from gift and/or estate tax. For estates of dece-
death. Your gross estate also includes the following. dents dying after December 31, 2010, the applicable ex-
• Life insurance proceeds payable to the estate or, if the clusion amount equals the basic exclusion amount plus
decedent owned the policy, to the decedent’s heirs. any DSUE amount. The DSUE amount is the remaining
applicable exclusion amount from the estate of a prede-
• The value of certain annuities payable to the estate or
ceased spouse who died after December 31, 2010. The
the decedent’s heirs.
DSUE amount is only available where an election was
• The value of certain property the decedent transferred made on the Form 706 filed by the deceased spouse’s es-
within 3 years before death. tate.

Taxable estate. The allowable deductions used in deter- Filing requirement. The following table lists the filing re-
mining the taxable estate include: quirements for estates of decedents dying after 2011.
• Funeral expenses paid out of the estate,
• Debts the decedent owed at the time of death,
• The marital deduction (generally, the value of the
property that passes from the estate to the surviving
spouse),
• The charitable deduction (generally, the value of the
property that passes from the decedent's estate to the
United States, any state, a political subdivision of a
state, the District of Columbia, or to a qualifying char-
ity for exclusively charitable purposes), and
• The state death tax deduction (generally, any estate,
inheritance, legacy, or succession taxes paid as the
result of the decedent’s death to any state or the Dis-
trict of Columbia).

Publication 559 (2022) Page 39

- 40 -

Page 40 of 51       Fileid: … tions/p559/2022/a/xml/cycle02/source                              10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Basic Exclusion Amount                                               determine the beneficiary’s basis in that property. Calcu-
                                                                     late  a  basis  consistent  with  the  final  estate  tax  value  by 
Year of Death                   File return if estate’s value is     starting with the reported value and then making any al-
                                              more than:             lowed adjustments.
2011                                          $5,000,000                For more information, see sections 1014(f) and 6035, 
2012                                          $5,120,000             the Instructions for Form 8971 and Schedule A, and  Col-
2013                                          $5,250,000             umn (e)—Cost or Other Basis in the     Instructions for Form 
                                                                     8949.  Also,  see  the  2022  Instructions  for  Schedule  D 
2014                                          $5,340,000             (Form 1041).
2015                                          $5,430,000
2016                                          $5,450,000             Generation-Skipping Transfer Tax
2017                                          $5,490,000
                                                                     The generation-skipping transfer (GST) tax may apply to 
2018                                          $11,180,000            gifts during the decedent's life or transfers occurring at the 
2019                                          $11,400,000            decedent's death, called bequests, made to skip persons. 
2020                                          $11,580,000            A  skip  person  is  a  person  who  belongs  to  a  generation 
                                                                     that  is  two  or  more  generations  below  the  generation  of 
2021                                          $11,700,000
                                                                     the  donor.  For  instance,  the  decedent's  grandchild  will 
2022*                                         $12,060,000            generally be a skip person to the decedent and the dece-
* See IRS.gov for inflation adjusted amount.                         dent’s spouse. The GST tax is figured on the amount of 
                                                                     the gift or bequest transferred to a skip person, after sub-
More information.  If you think the decedent will have an            tracting  any  GST  exemption  allocated  to  the  gift  or  be-
estate on which tax must be paid, or if the estate will have         quest at the maximum gift and estate tax rates. Each indi-
to file an estate tax return even if no tax will be due, see         vidual has a GST exemption equal to the basic exclusion 
Form  706,  Form  706-NA,  and  the  forms’  instructions  for       amount, as indexed for inflation, for the year the gift or be-
more information. You can get publications and forms at              quest was made. GSTs have three forms: direct skip, tax-
IRS.gov/Forms. The estate’s personal representative may              able distribution, and taxable termination.
want to speak with a qualified tax professional to receive           •   A direct skip is a transfer made during the decedent's 
help with estate tax questions.                                          life or occurring at death that is:
                                                                         1. Subject to the gift or estate tax,
Consistent Basis Reporting 
Requirement                                                              2. Of an interest in property, and
                                                                         3. Made to a skip person.
Certain  executors  are  required  to  report  the  estate  tax 
value of property passing from a decedent to the IRS and             •   A taxable distribution is any distribution from a trust to 
                                                                         a skip person which isn't a direct skip or a taxable ter-
to the recipient of the property (beneficiary). The purpose 
                                                                         mination.
of the requirement is to ensure that the appropriate value 
(or basis) is used to calculate the tax due from the sale or         •   A taxable termination is the end of a trust’s interest in 
disposal of property received from an estate.                            property where the property interest will be transferred 
                                                                         to a skip person.
An executor of an estate (or other person) required to 
file an estate tax return after July 31, 2015, must provide a        More information.    If you think the decedent has made a 
Form 8971 with attached Schedules A to the IRS, and a                gift or bequest on which GST tax must be paid, see Form 
copy of the beneficiary's Schedule A to each beneficiary             709, Form 706, Form 706-NA, and the forms’ instructions 
who receives or is to receive property from the estate. The          for more information. You can get publications and forms 
Schedule  A  must  show  the  final  estate  tax  value  of  the     at IRS.gov/Forms.  The  estate’s  personal  representative 
property received or to be received by the beneficiary. An           may want to speak with a qualified tax professional to re-
executor (or other person) who files an estate tax return            ceive help with GST questions.
only to make an election regarding the GST tax or porta-
bility  of  the  DSUE  is  not  required  to  provide  Form  8971 
and  Schedule  A.  The  executor  is  required  to  file  Form 
                                                                     Example
8971  and  all  Schedules  A  with  the  IRS  and  provide  the 
beneficiary  with  their  Schedule  A  within  30  days  of  the     The following is an example of a typical situation.
earlier  of  the  due  date  (including  extensions)  or  filing  of 
Form 706.                                                               On April 9, 2022, your father, Jo Smith, died at the age 
                                                                     of 72. Your father had not resided in a community property 
If Form 8971, Schedule A, Part 2, column C, received                 state  and  the  will  named  you  to  serve  as  executor  (per-
by  the  beneficiary  indicates  that  the  property  increases      sonal representative). Except for specific bequests to your 
the  estate  tax  liability,  the  beneficiary  must  use  a  basis  mother, Angel, of your parents' home and your father's au-
consistent with the final estate tax value of the property to        tomobile,  and  a  bequest  of  $5,000  to  the  church  your 

Page 40                                                                                            Publication 559 (2022)

- 41 -

Page 41 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

father attended, your father's will named your mother and tenants with right of survivorship and they were the
brother, Jamie, as beneficiaries. only joint tenants.
After the court has approved your appointment as the Your mother also gave you a Form W-2 that your fa-
executor, you should obtain an EIN for the estate. (See ther's employer had sent. In examining it, you discover
Duties under Personal Representatives, earlier.) Next, that your father had been paid $20,000 in salary between
you use Form 56 to notify the IRS that you have been ap- January 1, 2022, and April 9, 2022 (the date of death).
pointed executor of your father's estate. The Form W-2 showed wages of $20,000 in box 1 and
$845 as federal income tax withheld in box 2. The Form
Assets of the estate. Your father had the following as- W-2 also indicated social security and Medicare wages of
sets when your father died. $20,000 in boxes 3 and 5. The estate received a Form
• Checking account balance was $2,550 and savings 1099-MISC from the employer showing $12,000 in box 3.
account balance was $53,650. The estate received a Form 1099-INT showing your father
was paid $1,900 interest on the savings account at the
• Your father inherited the home from your grandpar- First S&L of Juneville in 2022, before the date of death.
ents on March 5, 1980. At that time, it was worth
$100,000, but was appraised at the time of your fa-
ther's death at $500,000. The home was free of exist- Final Return for Decedent—Form
ing debts (or mortgages) at the time of your father’s 1040 or 1040-SR
death.
From the papers in your father's files, you determine that
• Your father owned 500 shares of ABC Company stock the $20,000 paid to your father by the employer (as shown
that cost $10.20 a share in 1984. The stock had a in box 1 of the Form W-2), rental income, and interest are
mean selling price (midpoint between highest and the only items of income received between January 1 and
lowest selling price) of $25 a share on the date of the date of your father’s death. You will have to file an in-
death. Your father also owned 500 shares of XYZ come tax return for the period during which your father
Company stock that cost $30 a share in 1989. The lived. (You determine that your father timely filed the 2021
stock had a mean selling price on the date of death of income tax return before your father died.) The final return
$22. isn't due until April 15, 2023, the same date it would have
• The appraiser valued your father's automobile at been due had your father lived during all of 2022.
$6,300 and the household effects at $18,500. The check representing unpaid salary and earned but
• Your father's employer sent a check to your mother for unused vacation time wasn't paid to your father before the
$11,082 ($12,000 − $918 for social security and Medi- date of death, so the $12,000 isn't reported as income on
care taxes), representing unpaid salary and payment the final return. It is reported on the income tax return for
for accrued vacation time. The statement that came the estate (Form 1041) for 2022. The only taxable income
with the check indicated that no amount was withheld to be reported for your father will be the $20,000 salary
for income tax. The check was made out to the estate, (as shown in box 1 of the Form W-2), the $1,900 interest,
so your mother gave you the check. and your father’s portion of the rental income that was re-
ceived in 2022.
• The Easy Life Insurance Company gave your mother
a check for $275,000 because your mother was the Your father was a cash basis taxpayer and didn't report
beneficiary of your father’s life insurance policy. the interest accrued on the series EE U.S. savings bonds
on prior tax returns that were filed jointly with your mother.
• Your father was the owner of several series EE U.S.
As the personal representative of your father's estate, you
savings bonds on which your father named your
choose to report the interest earned on these bonds be-
mother as co-owner. Your father purchased the bonds
fore your father's death ($840) on the final income tax re-
during the past several years. The cost of these bonds
turn.
totaled $2,500. After referring to the appropriate table
of redemption values (see U.S. savings bonds ac- The rental property was leased the entire year of 2022
quired from decedent, earlier), you determine that in- for $1,000 per month. This is a net lease through the date
terest of $840 had accrued on the bonds at the date of of sale. The rental does not rise to the level of a section
your father's death. You must include the redemption 162 trade or business. Thus, it doesn’t qualify for the sec-
value of these bonds at date of death, $3,340, in your tion 199A deduction. Under local law, your parents (as
father's gross estate. joint tenants) each had a half interest in the income from
the property. Your father's will, however, stipulates that
• On July 1, 1996, your parents purchased a house for
the entire rental income is to be paid directly to your
$90,000. They have held the property for rental purpo-
mother. None of the rental income will be reported on the
ses continuously since its purchase. Your mother paid
income tax return for the estate. Instead, your mother will
one-third of the purchase price, or $30,000, and your
report all the rental income and expenses on Form 1040
father paid $60,000. They owned the property, how-
or 1040-SR.
ever, as joint tenants with right of survivorship. An ap-
praiser valued the property at $120,000. You include Checking the records and prior tax returns of your pa-
$60,000, one-half the value, in your father's gross es- rents, you find that they previously elected to use the ADS
tate because your parents owned the property as joint with the mid-month convention. Under ADS, the rental

Publication 559 (2022) Page 41

- 42 -

Page 42 of 51              Fileid: … tions/p559/2022/a/xml/cycle02/source                                           10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

house is depreciated using the straight line method over a               2. For the period after your father's death, you must 
40-year  recovery  period.  They  allocated  $15,000  of  the            make two computations.
cost to the land (which is never depreciable) and $75,000 
                                                                         a. Your mother's cost basis ($45,000) minus one-half 
to the rental house. Salvage value was disregarded for the 
                                                                                of the amount allocated to the land ($7,500) is 
depreciation  computation.  Before  2022,  $23,359  had 
                                                                                your mother’s depreciable basis ($37,500) for half 
been  allowed  as  depreciation.  (For  information  on  ADS, 
                                                                                of the property. She continues to use the same life 
see Pub. 946.)
                                                                                and depreciation method as was originally used 
Deductions. During the year, you received a bill from the                       for the property. The amount deductible for the re-
hospital for $945 and bills from your father's doctors total-                   maining 8 /  months is $664.1 2
ing $685. You paid these bills as they were presented. In                b. The other half of the property must be depreciated 
addition, you find other bills from your father’s doctors to-                   using a depreciation method that is acceptable for 
taling $5,302 that your father paid in 2022 and receipts for                    property placed in service in 2022. You chose to 
prescribed drugs purchased totaling $1,724. The funeral                         use ADS with the mid-month convention. The 
home presented you a bill for $6,890 for the expenses of                        value included in the estate ($60,000) less the 
your father's funeral, which you paid.                                          value allocable to the land ($10,000) is the depre-
The medical expenses you paid from the estate's funds                           ciable basis ($50,000) for this half of the property. 
($945 and $685) were for your father's care and were paid                       The amount deductible for this half of the property 
within 1 year after the date of death. They won't be used                       is $886 ($50,000 × 0.01771). See chapter 4 and 
to figure the taxable estate, so you can treat them as hav-                     Table A-13 in Pub. 946.
ing been paid by your father when medical services were 
received. See   Medical Expenses under                  Final Income Tax Show the total of the amounts in (1) and (2a) above on 
Return  for  Decedent—Form  1040  or  1040-SR,  earlier.                 line  17  of  Form  4562,  Depreciation  and  Amortization. 
However, you can't deduct the funeral expenses either on                 Show the amount in (2b) on line 20d. The total deprecia-
your father's final return or on the estate's income tax re-             tion deduction allowed for the year is $2,097.
turn. They are deductible only on the federal estate tax re-
                                                                         Filing  status.    After  December  31,  2022,  when  your 
turn (Form 706).
                                                                         mother determines the amount of your mother’s income, 
In  addition,  after  going  over  other  receipts  and  can-
                                                                         you and your mother must decide whether you will file a 
celed checks for the tax year with your mother, you deter-
                                                                         joint return or separate returns for your parents for 2022. 
mine that the following items are deductible on your pa-
                                                                         Your  mother  has  rental  income  and  $400  of  interest  in-
rents' 2022 income tax return.
                                                                         come from the savings account at the Mayflower Bank of 
                                                                         Juneville, so it appears to be to your mother’s advantage 
Health insurance. . . . . . . . . . . . . . . . . . . . . . . . . $4,250
State income tax paid. . . . . . . . . . . . . . . . . . . . . .  $1,491 to file a joint return.
Real estate tax on home. . . . . . . . . . . . . . . . . . . . .  $7,500
Contributions to church. . . . . . . . . . . . . . . . . . . . .  $4,830 Tax  computation.          The  refund  of  tax  due  is  $152.  The 
                                                                         computation is as follows:
Rental  expenses  included  real  estate  taxes  of  $700 
and mortgage interest of $410. In addition, insurance pre-               Income:
miums of $260 and painting and repair expenses for $350                  Salary (per Form W-2). . . . . . . . . . . .           $20,000
were paid. These rental expenses totaled $1,720 and are                  Interest income. . . . . . . . . . . . . . .               3,140
                                                                         Net rental income. . . . . . . . . . . . .                 8,183
reflected on Schedule E (Form 1040).
Your mother and father owned the property as joint ten-                  Adjusted gross income. . . . . . . . . . . . . . . . . . . .     $31,323
                                                                         Minus: Itemized deductions. . . . . . . . . . . . . . .          24,378
ants with right of survivorship and they were the only joint 
                                                                         Balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,945
tenants, so your mother’s basis in this property upon your               Taxable income. . . . . . . . . . . . . . . . . . . . . . . . .  6,945
father's  death  is  $93,047.  This  is  figured  by  adding  the 
$60,000 value of the half interest included in your father's             Income tax from tax table. . . . . . . . . . . . . . . . . . .   $693
gross  estate  to  your  mother's  $45,000  share  of  the  cost         Minus: Tax withheld. . . . . . . . . . . . . . . . . . . .       $845
basis and subtracting your mother's $11,953 share of de-                 Refund of taxes. . . . . . . . . . . . . . . . . . . . . . . .   $152
preciation (including 2022 depreciation for the period be-
fore your father's death), as explained next.
For 2022, you must make the following computations to                    Income Tax Return of an 
figure the depreciation deduction.                                       Estate—Form 1041
1. For the period before your father's death, depreciate 
the property using the same method, basis, and life                      2022 income tax return.              Having determined the tax lia-
used by your parents in previous years. They used                        bility for your father's final return, you now figure the es-
the mid-month convention, so the amount deductible                       tate's  taxable  income.  You  decide  to  use  the  calendar 
for 3 /  months is $547. (This brings the total depreci-1 2              year and the cash method of accounting to report the es-
ation to $23,906 ($23,359 + $547) at the time of your                    tate's income. This return is also due by April 15, 2023.
father's death.)                                                         In  addition  to  the  amount  you  received  from  your  fa-
                                                                         ther's  employer  for  unpaid  salary  and  for  vacation  pay 
                                                                         ($12,000)  entered  on  line  8,  you  received  a  dividend 

Page 42                                                                                                                 Publication 559 (2022)

- 43 -

Page 43 of 51               Fileid: … tions/p559/2022/a/xml/cycle02/source                                                 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

check  from  the  XYZ  Company  on  June  16,  2022.  The                     Tax  computation.                The  taxable  income  of  the  estate 
check  was  for  $750  and  you  enter  it  on  line  2a.  The                for 2022 is $8,825, figured as follows:
amount is a qualified dividend and you show the allocation 
to the beneficiaries and the estate on line 2b. The amount                    Gross income:
allocated to the beneficiary ($179) is based on the distrib-                  Income in respect of a decedent. . . . . . . . . . . . . .             $12,000
utable dividend income before any deductions. The estate                      Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . .       750
received  a  Form  1099-INT  showing  $2,250  interest  paid                  Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . .      2,250
by the bank on the savings account in 2022 after your fa-                                                                                            $15,000
ther died. Show this amount on line 1.                                        Minus: Deductions and income distribution
                                                                              Real estate taxes      . . . . . . . . . . . . . . . .       $2,250
Deductions.        In November 2022, you received a bill for                  Attorney's fees. . . . . . . . . . . . . . . . . .             1,325
the real estate taxes on your parents' home. The bill was                     Exemption. . . . . . . . . . . . . . . . . . . .                 600
                                                                              Distribution   . . . . . . . . . . . . . . . . . . . .         2,000   6,175
for  $2,250,  which  you  paid.  Include  real  estate  taxes  on 
line 11.                                                                      Taxable income . . . . . . . . . . . . . . . . . . . . . . . . .       $8,825
You paid $1,325 for attorney's fees in connection with 
                                                                              The estate had taxable income of $8,825 which inclu-
administration of the estate. This is an expense of admin-
                                                                              ded $571 of qualified dividends for the year, which leaves 
istration and is deducted on line 14. If an estate tax return 
                                                                              the estate with a tax due of $1,682 for 2022. To figure the 
is filed on Form 706, you must, however, file with the re-
                                                                              amount  due,  see  the  Qualified  Dividends  Tax  Work-
turn  a  statement  in  duplicate  that  such  expense  hasn't 
                                                                              sheet—Schedule  G,  line  1a,  in  the                 Instructions  for  Form 
been claimed as a deduction from the gross estate for fig-
                                                                              1041.
uring the federal estate tax on Form 706, and that all rights 
to claim that deduction on Form 706 are waived.                               2022  income  tax  return  for  estate.                        On  January  7, 
Distributions.       You  made  a  distribution  of  $2,000  to               2023, you receive a dividend check from the XYZ Com-
your  father's  brother,  Jamie.  The  distribution  was  made                pany for $500. You also have interest posted to the sav-
from current income of the estate under the terms of the                      ings  account  in  January  totaling  $350.  On  January  28, 
will.                                                                         2023, you make a final accounting to the court and obtain 
The  income  distribution  deduction  ($2,000)  is  figured                   permission to close the estate. In the accounting, you list 
on Schedule B of Form 1041 and deducted on line 18.                           $1,650 as the balance of the expense of administering the 
You characterized the $2,000 that is included in income                       estate.
and reported it on Schedule K-1 (Form 1041) as follows:                       You  advise  the  court  that  you  plan  to  pay  $5,000  to 
                                                                              Hometown  Church  under  the  provisions  of  the  will,  and 
      Step 1 — Allocation of Income & Deductions                              that you will distribute the balance of the property to your 
                                                                              mother, the remaining beneficiary.
                                                               Distributable 
Type of Income                   Amount Deductions                 Net Income Gross income.                After making the distributions already 
                                                                              described, you can wind up the affairs of the estate. The 
Interest (15%)                   $ 2,250             ($536)        $ 1,714    gross income of the estate for 2023 is more than $600, so 
Dividends (5%)                         750             (179)       571
Other Income (80%)                 12,000            (2,860)       9,140      you  must  file  a  final  income  tax  return,  Form  1041,  for 
Total                            $15,000         ($3,575)          $11,425    2023 (not shown). The estate's gross income for 2023 is 
                                                                              $850 (dividends of $500 and interest of $350).
                                                                              Deductions.            After making the following computations, 
         Step 2 — Allocation of Distribution
                                                                              you determine that none of the distributions made to your 
      (Report on the Schedule K-1 for Jamie)
                                                                              mother must be included in your mother’s taxable income 
Line 1—Interest                                                               for 2023.
$2,000 × (1,714 ÷ 11,425). . . . . . . . . . . . . . . . . .       $300
Line 2b—Total dividends                                                       Gross income for 2023:
$2,000 × (571 ÷ 11,425)    . . . . . . . . . . . . . . . . . . .   100        Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . .       $500
Line 5—Other income                                                           Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . .      350
$2,000 × (9,140 ÷ 11,425). . . . . . . . . . . . . . . . . .       1,600                                                                             $850
Total Distribution . . . . . . . . . . . . . . . . . . . . . . . . $2,000     Less deductions:
                                                                              Administration expense         . . . . . . . . . . . . . . . . . . .   $1,650
The  estate  took  an  income  distribution  deduction,  so                   Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ($800)
you must prepare Schedule I (Form 1041), regardless of 
whether the estate is liable for the AMT.                                     Note that because the contribution of $5,000 to Home-
The other distribution you made from the assets of the                        town Church wasn't required under the terms of the will to 
estate in 2022 was the transfer of the automobile to your                     be paid out of the gross income of the estate, it isn't de-
mother on July 1. This is included in the bequest of prop-                    ductible and wasn't included in the computation.
erty, so it isn't included in computing the distributions of in-              The estate had no distributable net income in 2023, so 
come  to  the  beneficiary.  The  life  insurance  proceeds  of               none of the distributions made to your mother have to be 
$275,000  paid  directly  to  your  mother  by  the  insurance                included in your mother’s gross income.
company aren't an asset of the estate.

Publication 559 (2022)                                                                                                                               Page 43

- 44 -

Page 44 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A. Checklist of Forms and Due Dates for Executor,

Administrator, or Personal Representative

Form No. Title Due Date**
SS-4 Application for Employer Identification Number As soon as possible. The identification number
must be included in returns, statements, and other
documents.
56 Notice Concerning Fiduciary Relationship As soon as all necessary information is available.*
706 United States Estate (and Generation-Skipping Transfer) Tax 9 months after date of decedent's death.
Return
706-A United States Additional Estate Tax Return 6 months after cessation or disposition of
special-use valuation property.
706-GS(D) Generation-Skipping Transfer Tax Return for Distributions Generally, April 15th of the year after the
distribution.
706-GS(D-1) Notification of Distribution From a Generation-Skipping Trust Generally, April 15th of the year after the
distribution.
706-GS(T) Generation-Skipping Transfer Tax Return for Terminations Generally, April 15th of the year after the taxable
termination.
706-NA United States Estate (and Generation-Skipping Transfer) Tax 9 months after date of decedent's death.
Return, Estate of nonresident not a citizen of the United
States
709 United States Gift (and Generation-Skipping Transfer) Tax April 15th of the year after the gift was made.
Return
712 Life Insurance Statement Part I to be filed with estate tax return.
1040 U.S. Individual Income Tax Return Generally, April 15th of the year after death.**
1040–SR U.S. Tax Return for Seniors Generally, April 15th of the year after death.**
1040-NR U.S. Nonresident Alien Income Tax Return See form instructions.
1041 U.S. Income Tax Return for Estates and Trusts 15th day of 4th month after end of estate's tax
year.**
1041-T Allocation of Estimated Tax Payments to Beneficiaries 65th day after end of estate's tax year.
1041-ES Estimated Income Tax for Estates and Trusts Generally, April 15th, June 15th, Sept. 15th, and
Jan. 15th for calendar-year filers.**
1042 Annual Withholding Tax Return for U.S. Source Income of March 15th.**
Foreign Persons
1042-S Foreign Person's U.S. Source Income Subject to Withholding March 15th.**
4768 Application for Extension of Time To File a Return and/or Pay See form instructions.
U.S. Estate (and Generation-Skipping Transfer) Taxes
4810 Request for Prompt Assessment Under Internal Revenue As soon as possible after filing Form 1040 or Form
Code Section 6501(d) 1041.
4868 Application for Automatic Extension of Time To File U.S. April 15th.**
Individual Income Tax Return
5495 Request for Discharge From Personal Liability Under Internal See form instructions.
Revenue Code Section 2204 or 6905
7004 Application for Automatic Extension of Time to File Certain 15th day of 4th month after end of estate's tax
Business Income Tax, Information, and Other Returns year.**
8300 Report of Cash Payments Over $10,000 Received in a Trade 15th day after the date of the transaction.
or Business
8822 Change of Address As soon as the address is changed.
8822-B Change of Address or Responsible Party — Business As soon as the address is changed.
8892 Application for Automatic Extension of Time To File Form 709 April 15th.**
and/or Payment of Gift/Generation-Skipping Transfer Tax
* A personal representative must report the termination of the estate, in writing, to the IRS. Form 56 can be used for this purpose.
** If the due date falls on a Saturday, Sunday, or legal holiday, file on the next business day.

Page 44 Publication 559 (2022)

- 45 -

Page 45 of 51       Fileid: … tions/p559/2022/a/xml/cycle02/source                 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table B. Worksheet To Reconcile 

Amounts Reported in Name of Decedent 

on Information Returns (Forms W-2, 

1099-INT, 1099-DIV, etc.)                                                          Keep for Your Records
Name of Decedent                               Date of Death      Decedent's Social Security Number

Name of Personal Representative, Executor, or Administrator       Estate's Employer Identification Number (If Any)

                                               A.                  B.              C.                             D.
                                               Enter total amount Enter part of    Amount           Part of column C 
                                               shown on           amount in column reportable on    that is income in 
                   Source                      information return A reportable on  estate's or      respect of a 
                (list each payer)                                 decedent's final beneficiary's                  decedent
                                                                   return          income tax 
                                                                                   return (column A 
                                                                                   minus column B)
1. Wages

2. Interest income

3. Dividends

4. State income tax refund
5. Capital gains
6. Pension income

7. Rents, royalties

8. Taxes withheld*

9. Other items, such as social security, 
business and farm income or loss, 
unemployment compensation, etc.

* List each withholding agent (employer, etc.).

Publication 559 (2022)                                                                                                Page 45

- 46 -

Page 46 of 51         Fileid: … tions/p559/2022/a/xml/cycle02/source                      10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

                                                                    Using online tools to help prepare your return.       Go to 
                                                                    IRS.gov/Tools for the following.
How To Get Tax Help
                                                                    • The Earned Income Tax Credit Assistant IRS.gov/ (
If you have questions about a tax issue; need help prepar-            EITCAssistant) determines if you’re eligible for the 
ing your tax return; or want to download free publications,           earned income credit (EIC).
forms, or instructions, go to IRS.gov to find resources that        • The Online EIN Application IRS.gov/EIN ( ) helps you 
can help you right away.                                              get an employer identification number (EIN), at no 
                                                                      cost.
Preparing and filing your tax return. After receiving all 
your wage and earnings statements (Forms W-2, W-2G,                 • The Tax Withholding Estimator IRS.gov/W4app (      ) 
1099-R,  1099-MISC,  1099-NEC,  etc.);  unemployment                  makes it easier for you to estimate the federal income 
compensation statements (by mail or in a digital format) or           tax you want your employer to withhold from your pay-
other  government  payment  statements  (Form  1099-G);               check. This is tax withholding. See how your withhold-
and  interest,  dividend,  and  retirement  statements  from          ing affects your refund, take-home pay, or tax due.
banks and investment firms (Forms 1099), you have sev-              • The First-Time Homebuyer Credit Account Look-up 
eral options to choose from to prepare and file your tax re-          (IRS.gov/HomeBuyer) tool provides information on 
turn.  You  can  prepare  the  tax  return  yourself,  see  if  you   your repayments and account balance.
qualify for free tax preparation, or hire a tax professional to 
prepare your return.                                                • The Sales Tax Deduction Calculator IRS.gov/ (
                                                                      SalesTax) figures the amount you can claim if you 
Free options for tax preparation.    Go to IRS.gov to see             itemize deductions on Schedule A (Form 1040).
your options for preparing and filing your return online or 
                                                                       Getting  answers  to  your  tax  questions.          On 
in your local community, if you qualify, which include the 
                                                                       IRS.gov,  you  can  get  up-to-date  information  on 
following.
                                                                       current events and changes in tax law.
• Free File. This program lets you prepare and file your 
                                                                    • IRS.gov/Help: A variety of tools to help you get an-
  federal individual income tax return for free using 
                                                                      swers to some of the most common tax questions.
  brand-name tax-preparation-and-filing software or 
  Free File fillable forms. However, state tax preparation          • IRS.gov/ITA: The Interactive Tax Assistant, a tool that 
  may not be available through Free File. Go to IRS.gov/              will ask you questions and, based on your input, pro-
  FreeFile to see if you qualify for free online federal tax          vide answers on a number of tax law topics.
  preparation, e-filing, and direct deposit or payment op-          • IRS.gov/Forms: Find forms, instructions, and publica-
  tions.                                                              tions. You will find details on the most recent tax 
• VITA. The Volunteer Income Tax Assistance (VITA)                    changes and hundreds of interactive links to help you 
  program offers free tax help to people with                         find answers to your questions.
  low-to-moderate incomes, persons with disabilities,               • You may also be able to access tax law information in 
  and limited-English-speaking taxpayers who need                     your electronic filing software.
  help preparing their own tax returns. Go to IRS.gov/
  VITA, download the free IRS2Go app, or call 
  800-906-9887 for information on free tax return prepa-            Need someone to prepare your tax return?             There are 
  ration.                                                           various  types  of  tax  return  preparers,  including  enrolled 
                                                                    agents, certified public accountants (CPAs), accountants, 
• TCE. The Tax Counseling for the Elderly (TCE) pro-
                                                                    and many others who don’t have professional credentials. 
  gram offers free tax help for all taxpayers, particularly 
                                                                    If you choose to have someone prepare your tax return, 
  those who are 60 years of age and older. TCE volun-
                                                                    choose that preparer wisely. A paid tax preparer is:
  teers specialize in answering questions about pen-
  sions and retirement-related issues unique to seniors.            • Primarily responsible for the overall substantive accu-
  Go to IRS.gov/TCE, download the free IRS2Go app,                    racy of your return,
  or call 888-227-7669 for information on free tax return           • Required to sign the return, and
  preparation.
                                                                    • Required to include their preparer tax identification 
• MilTax. Members of the U.S. Armed Forces and                        number (PTIN).
  qualified veterans may use MilTax, a free tax service 
  offered by the Department of Defense through Military             Although  the  tax  preparer  always  signs  the  return, 
  OneSource. For more information go to                             you're ultimately responsible for providing all the informa-
  MilitaryOneSource (MilitaryOneSourceMil/Tax).                     tion  required  for  the  preparer  to  accurately  prepare  your 
  Also, the IRS offers Free Fillable Forms, which can               return.  Anyone  paid  to  prepare  tax  returns  for  others 
  be  completed  online  and  then  filed  electronically  re-      should have a thorough understanding of tax matters. For 
  gardless of income.                                               more information on how to choose a tax preparer, go to 
                                                                    Tips for Choosing a Tax Preparer on IRS.gov.

                                                                    Coronavirus. Go  to IRS.gov/Coronavirus  for  links  to  in-
                                                                    formation on the impact of the coronavirus, as well as tax 

Page 46                                                                                               Publication 559 (2022)

- 47 -

Page 47 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

relief available for individuals and families, small and large • Plain Text File (TXT).
businesses, and tax-exempt organizations. Braille Ready File (BRF).
•
Employers can register to use Business Services On- Disasters. Go to Disaster Assistance and Emergency
line. The Social Security Administration (SSA) offers on- Relief for Individuals and Businesses to review the availa-
line service at SSA.gov/employer for fast, free, and secure ble disaster tax relief.
online W-2 filing options to CPAs, accountants, enrolled
agents, and individuals who process Form W-2, Wage Getting tax forms and publications. Go to IRS.gov/
and Tax Statement, and Form W-2c, Corrected Wage and Forms to view, download, or print all of the forms, instruc-
Tax Statement. tions, and publications you may need. Or, you can go to
IRS.gov/OrderForms to place an order.
IRS Social Media. Go to IRS.gov/Social/Media to see
the various social media tools the IRS uses to share the Getting tax publications and instructions in eBook
latest information on tax changes, scam alerts, initiatives, format. You can also download and view popular tax
products, and services. At the IRS, privacy and security publications and instructions (including the Instructions for
are our highest priority. We use these tools to share public Form 1040) on mobile devices as eBooks at IRS.gov/
information with you. Don’t post your social security num- eBooks.
ber (SSN) or other confidential information on social me-
dia sites. Always protect your identity when using any so- Note. IRS eBooks have been tested using Apple's
cial network site. iBooks for iPad. Our eBooks haven’t been tested on other
The following IRS YouTube channels provide short, in- dedicated eBook readers, and eBook functionality may
formative videos on various tax-related topics in English, not operate as intended.
Spanish, and ASL:
Access your online account (individual taxpayers
• www.Youtube.com/irsvideos. only). Go to IRS.gov/Account to securely access infor-
• www.Youtube.com/irsvideosmultilingual. mation about your federal tax account.
• www.Youtube.com/irsvideosASL. • View the amount you owe and a breakdown by tax
year.
Watching IRS videos. The IRS Video portal
IRSVideos.gov contains video and audio presentations for • See payment plan details or apply for a new payment
plan.
individuals, small businesses, and tax professionals.
• Make a payment or view 5 years of payment history
Online tax information in other languages. You can and any pending or scheduled payments.
find information on IRS.gov/MyLanguage if English isn’t
your native language. • Access your tax records, including key data from your
most recent tax return, and transcripts.
Free Over-the-Phone Interpreter (OPI) Service. The • View digital copies of select notices from the IRS.
IRS is committed to serving our multilingual customers by
offering OPI services. The OPI service is a federally fun- • Approve or reject authorization requests from tax pro-
ded program and is available at Taxpayer Assistance fessionals.
Centers (TACs), other IRS offices, and every VITA/TCE • View your address on file or manage your communi-
return site. OPI service is accessible in more than 350 lan- cation preferences.
guages.
Tax Pro Account. This tool lets your tax professional
Accessibility Helpline available for taxpayers with submit an authorization request to access your individual
disabilities. Taxpayers who need information about ac- taxpayer IRS online account. For more information, go to
cessibility services can call 833-690-0598. The Accessi- IRS.gov/TaxProAccount.
bility Helpline can answer questions related to current and
future accessibility products and services available in al- Using direct deposit. The fastest way to receive a tax
ternative media formats (for example, braille, large print, refund is to file electronically and choose direct deposit,
audio, etc.). The Accessibility Helpline does not have ac- which securely and electronically transfers your refund di-
cess to your IRS account. For help with tax law, refunds, rectly into your financial account. Direct deposit also
or account-related issues, go to IRS.gov/LetUsHelpYou. avoids the possibility that your check could be lost, stolen,
destroyed, or returned undeliverable to the IRS. Eight in
Note. Form 9000, Alternative Media Preference, or 10 taxpayers use direct deposit to receive their refunds. If
Form 9000(SP) allows you to elect to receive certain types you don’t have a bank account, go to IRS.gov/
of written correspondence in the following formats. DirectDeposit for more information on where to find a
bank or credit union that can open an account online.
• Standard print.
• Large print. Getting a transcript of your return. The quickest way
to get a copy of your tax transcript is to go to IRS.gov/
• Braille.
Transcripts. Click on either “Get Transcript Online” or “Get
• Audio (MP3). Transcript by Mail” to order a free copy of your transcript.

Publication 559 (2022) Page 47

- 48 -

Page 48 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

If you prefer, you can order your transcript by calling • Cash: You may be able to pay your taxes with cash at
800-908-9946. a participating retail store.
Reporting and resolving your tax-related identity • Same-Day Wire: You may be able to do same-day
theft issues. wire from your financial institution. Contact your finan-
cial institution for availability, cost, and time frames.
• Tax-related identity theft happens when someone
steals your personal information to commit tax fraud. Note. The IRS uses the latest encryption technology to
Your taxes can be affected if your SSN is used to file a ensure that the electronic payments you make online, by
fraudulent return or to claim a refund credit. phone, or from a mobile device using the IRS2Go app are
safe and secure. Paying electronically is quick, easy, and
• The IRS doesn’t initiate contact with taxpayers by
faster than mailing in a check or money order.
email, text message (including shortened links), tele-
phone calls, or social media channels to request or What if I can’t pay now? Go to IRS.gov/Payments for
verify personal or financial information. This includes more information about your options.
requests for personal identification numbers (PINs),
passwords, or similar information for credit cards, • Apply for an online payment agreement (IRS.gov/
banks, or other financial accounts. OPA) to meet your tax obligation in monthly install-
ments if you can't pay your taxes in full today. Once
• Go to IRS.gov/IdentityTheft, the IRS Identity Theft you complete the online process, you will receive im-
Central webpage, for information on identity theft and mediate notification of whether your agreement has
data security protection for taxpayers, tax professio- been approved.
nals, and businesses. If your SSN has been lost or
stolen or you suspect you’re a victim of tax-related • Use the Offer in Compromise Pre-Qualifier to see if
identity theft, you can learn what steps you should you can settle your tax debt for less than the full
take. amount you owe. For more information on the Offer in
Compromise program, go to IRS.gov/OIC.
• Get an Identity Protection PIN (IP PIN). IP PINs are
six-digit numbers assigned to taxpayers to help pre- Filing an amended return. Go to IRS.gov/Form1040X
vent the misuse of their SSNs on fraudulent federal in- for information and updates.
come tax returns. When you have an IP PIN, it pre-
vents someone else from filing a tax return with your Checking the status of your amended return. Go to
SSN. To learn more, go to IRS.gov/IPPIN. IRS.gov/WMAR to track the status of Form 1040-X amen-
ded returns.
Ways to check on the status of your refund.
Note. It can take up to 3 weeks from the date you filed
• Go to IRS.gov/Refunds.
your amended return for it to show up in our system, and
• Download the official IRS2Go app to your mobile de- processing it can take up to 16 weeks.
vice to check your refund status.
Understanding an IRS notice or letter you’ve re-
• Call the automated refund hotline at 800-829-1954. ceived. Go to IRS.gov/Notices to find additional informa-
Note. The IRS can’t issue refunds before mid-Febru- tion about responding to an IRS notice or letter.

ary for returns that claimed the EIC or the additional child Note. You can use Schedule LEP (Form 1040), Re-
tax credit (ACTC). This applies to the entire refund, not quest for Change in Language Preference, to state a pref-
just the portion associated with these credits. erence to receive notices, letters, or other written commu-
Making a tax payment. Go to IRS.gov/Payments for in- nications from the IRS in an alternative language. You
formation on how to make a payment using any of the fol- may not immediately receive written communications in
lowing options. the requested language. The IRS’s commitment to LEP
taxpayers is part of a multi-year timeline that is scheduled
• IRS Direct Pay: Pay your individual tax bill or estima- to begin providing translations in 2023. You will continue
ted tax payment directly from your checking or sav- to receive communications, including notices and letters
ings account at no cost to you. in English until they are translated to your preferred lan-
• Debit or Credit Card: Choose an approved payment guage.
processor to pay online or by phone.
Contacting your local IRS office. Keep in mind, many
• Electronic Funds Withdrawal: Schedule a payment questions can be answered on IRS.gov without visiting an
when filing your federal taxes using tax preparation IRS TAC. Go to IRS.gov/LetUsHelp for the topics people
software or through a tax professional. ask about most. If you still need help, IRS TACs provide
• Electronic Federal Tax Payment System: Best option tax help when a tax issue can’t be handled online or by
for businesses. Enrollment is required. phone. All TACs now provide service by appointment, so
you’ll know in advance that you can get the service you
• Check or Money Order: Mail your payment to the ad- need without long wait times. Before you visit, go to
dress listed on the notice or instructions. IRS.gov/TACLocator to find the nearest TAC and to check
hours, available services, and appointment options. Or,

Page 48 Publication 559 (2022)

- 49 -

Page 49 of 51 Fileid: … tions/p559/2022/a/xml/cycle02/source 10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

on the IRS2Go app, under the Stay Connected tab, How Can You Reach TAS?
choose the Contact Us option and click on “Local Offices.”
TAS has offices in every state, the District of Columbia,
and Puerto Rico. Your local advocate’s number is in your
The Taxpayer Advocate Service (TAS)
local directory and at TaxpayerAdvocate.IRS.gov/
Is Here To Help You Contact-Us. You can also call us at 877-777-4778.
What is TAS?
How Else Does TAS Help Taxpayers?
TAS is an independent organization within the IRS that
helps taxpayers and protects taxpayer rights. Their job is TAS works to resolve large-scale problems that affect
to ensure that every taxpayer is treated fairly and that you many taxpayers. If you know of one of these broad issues,
know and understand your rights under the Taxpayer Bill report it to them at IRS.gov/SAMS.
of Rights.
TAS for Tax Professionals
How Can You Learn About Your Taxpayer
TAS can provide a variety of information for tax professio-
Rights?
nals, including tax law updates and guidance, TAS pro-
The Taxpayer Bill of Rights describes 10 basic rights that grams, and ways to let TAS know about systemic prob-
all taxpayers have when dealing with the IRS. Go to lems you’ve seen in your practice.
TaxpayerAdvocate.IRS.gov to help you understand what
these rights means to you and how they apply. These are Low Income Taxpayer Clinics (LITCs)
your rights. Know them. Use them.
LITCs are independent from the IRS. LITCs represent in-
What Can TAS Do for You? dividuals whose income is below a certain level and need
to resolve tax problems with the IRS, such as audits, ap-
TAS can help you resolve problems that you can’t resolve peals, and tax collection disputes. In addition, LITCs can
with the IRS. And their service is free. If you qualify for provide information about taxpayer rights and responsibili-
their assistance, you will be assigned to one advocate ties in different languages for individuals who speak Eng-
who will work with you throughout the process and will do lish as a second language. Services are offered for free or
everything possible to resolve your issue. TAS can help a small fee for eligible taxpayers. To find an LITC near
you if: you, go to TaxpayerAdvocate.IRS.gov/about-us/Low-
Income-Taxpayer-Clinics-LITC or see IRS Pub. 4134, Low
• Your problem is causing financial difficulty for you,
Income Taxpayer Clinic List .
your family, or your business;
• You face (or your business is facing) an immediate
threat of adverse action; or
• You’ve tried repeatedly to contact the IRS but no one
has responded, or the IRS hasn’t responded by the
date promised.

Publication 559 (2022) Page 49

- 50 -

Page 50 of 51         Fileid: … tions/p559/2022/a/xml/cycle02/source                10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

                   To help us develop a more useful index, please let us know if you have ideas for index entries.
Index              See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.
 
                                    Not treated as bequests  34
A                                   Property, in kind 28                  G
Accelerated death benefits   8 19,                                        Gift, property 18
Archer MSA   8 17,                 E
Assistance (See Tax help)          Education savings account,             I
Astronauts:                         Coverdell   8 17,                     Identification number, 
 Tax forgiveness   11              Estate:                                 application   3
                                    Income tax return 22                  Income:
B                                   Insolvent 4                            Community   8
Basis:                              Period of administration 34            Distributable net income    27
 Inherited property  20             Tax deduction   17                     Distributed currently 31
 Joint interest property  20        Termination  34                        Interest and dividend      7
 Qualified joint interest 20        Transfer of unused deductions      35  Partnership, final return   7
Beneficiary:                       Estate tax deduction  17                S corporation  7
 Basis of property 20              Estimated tax 29 36,                    Self-employment   8
 Character of distributions  32    Example:                               Income in respect of decedent                    13, 
 Excess deductions   35             Comprehensive     40                   16
 Income received   21               Decedent's final return 41            Income tax return of an estate:
 Liability, estate's income tax 23  Estate's tax return 42                 Credits, tax, and payments                    29
 Nonresident alien   23            Exemption:                              Exemption and deductions                      25
 Reporting distributions  33        Estate's tax return 25                 Filing requirements 22
 Successor   35                    Expenses:                               Income to include   24
 Treatment of distributions  30     Accrued   26                           Name, address, and signature                    30
 Unused loss carryovers    35       Administration  26                     When and where to file      30
Bequest:                            Deductions in respect of              Inherited IRAs 22
 Defined 33                         decedent     17                       Inherited property 18
 Property received   18             Funeral  29                           Installment obligations      14 25, 
                                    Medical  8 29,                        Insurance 18
C                                  Extension to file Form 1041       30
                                                                          J
Claim, credit or refund   11
                                   F
Combat zone    10                                                         Joint return:
Comments   2                       Fiduciary relationship  4               Revoked by personal 
Coverdell education savings        Filing requirements:                      representative  6
 account (ESA)     8 17,            Decedent's final return 5              Who can file  6
Credit:                             Estate's tax return 22
 Child tax 10                      Final return for decedent:             L
 Earned income    10                Credits  10                           Losses:
 Elderly or disabled 10             Exemption and deductions         8     Deduction on final return   9
 Final return for decedent  10      Filing requirements  5                 Estate's tax return 26
 General business    10             Income to include   6
                                    Joint return 6                        M
D                                   Name, address, and signature       5  Military or terrorist actions:
Death benefits:                     Other taxes  10                        Claim for credit or refund   11
 Accelerated   8 19,                Payments  10                           Defined 11
 Public safety officers 21          When and where to file  5              Tax forgiveness 10
Decedent:                           Who must file  5
 Final return 5                    Form:                                  N
 Income in respect of   13          1040-NR   6 23,                       Notice of fiduciary relationship:
Deductions:                         1041   22                              Form 56  4
 Estate tax  17                     1042   23
 In respect of decedent   17        1310   6                              P
 Medical expenses    8              4810   4                              Partnership income   7 15, 
 Standard  8                        56 4                                  Penalty:
Distributable net income   27       6251   10                              Information returns 24
Distributions:                      706  36                                Substantial valuation 
 Deduction   27                     SS–4   3                                 misstatement  21
 Limit on deduction  28            Funeral expenses   29

Page 50                                                                                Publication 559 (2022)

- 51 -

Page 51 of 51        Fileid: … tions/p559/2022/a/xml/cycle02/source          10:45 - 7-Dec-2022

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Personal representative:                 Information 23              Payments, final return 10
Defined 3                              Roth IRA 16                   Refund of income (claim)                            6
Duties  3                                                            Self-employment    10
Fees received 5                        S                             Transfer of credit 36
Penalty 3 4,                           Separate shares rule  27     Tax help 46
Prompt assessment, request    4        Suggestions   2              Terrorist action, tax relief 10
Public safety officers, death          Surviving spouse  13         Terrorist victim 11
benefits  21                           Survivors:
Publications (See Tax help)              Income 21                  V
                                         Tax benefits 13            Valuation method:
R                                                                    Inherited property 20
Refund:                                T                             Special-use 20
File for decedent 5                    Tax:                         Victims of terrorist attacks                         11
Military or terrorist action deaths 11   Alternative minimum:
Release from liability 4                  Estate 29                 W
Return:                                   Individuals  10           Widows and widowers, tax benefits 
Decedent's final  5                      Benefits, survivors 13      (See Surviving spouse)
Estate's income tax 22                   Estimated, estate 29 36, 

Publication 559 (2022)                                                                                                    Page 51

PDF file checksum: 1171328692

(Plugin #1/9.12/13.0)