Department of the Treasury

Internal Revenue Service

Publication 559

Cat. No. 15107U

Survivors, 

Executors, and 

Administrators

For use in preparing

2023 Returns

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Contents

Reminders ............................... 2

Introduction .............................. 2

Personal Representative .................... 3

Duties ................................ 3

Fees Received .......................... 5

Final Income Tax Return for Decedent—Form 

1040 or 1040-SR ........................ 5

Name, Address, and Signature .............. 5

When and Where To File ................... 5

Filing Requirements ...................... 5

Income To Include ....................... 6

Deductions ............................ 8

Credits, Other Taxes, Payments .............. 9

Tax Forgiveness for Armed Forces Members, 

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 ................ 31

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 .............................. 34

Termination of Estate .................... 35

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

Table B. Worksheet To Reconcile Amounts 

Reported in Name of Decedent ........... 45

How To Get Tax Help ....................... 46

Feb 1, 2024
Index .................................. 50

Future Developments

For the latest information about developments related to 

Pub. 559, such as legislation enacted after it was 

published, go to IRS.gov/Pub 559.

Reminders

Net operating loss (NOL) carryback. Generally, an 

NOL arising in a tax year beginning in 2021 or later may 

not be carried back and instead must be carried forward 

indefinitely. However, farming losses arising in tax years 

beginning in 2021 or later may be carried back 2 years 

and carried forward indefinitely.

For special rules for NOLs arising in 2018, 2019, or 

2020, see Pub. 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts, for more information.

Excess deductions on termination. Under Final 

Regulations - TD9918, each excess deduction on termination of an estate or trust retains its separate character as 

an amount allowed in arriving at adjusted gross income 

(AGI), a non-miscellaneous itemized deduction, or a miscellaneous itemized deduction. For more information, see 

the Instructions for Form 1041.

Consistent treatment of estate and trust items. Beneficiaries must generally treat estate items the same way on 

their individual returns as they are treated on the estate's 

return.

Consistent basis reporting between estate and person acquiring property from a decedent. Certain executors are required to report the estate tax value of property passing from a decedent to the IRS and to the 

recipient of the property (beneficiary). See Consistent Basis Reporting Requirement, later, for more information.

Filing status name changed to qualifying surviving 

spouse. The filing status qualifying widow(er) is now 

called qualifying surviving spouse. The rules for the filing 

status have not changed. The same rules that applied to 

qualifying widow(er) apply to qualifying surviving spouse. 

See Qualifying surviving spouse, later.

Extension of time to elect portability. Effective July 8, 

2022, Rev. Proc. 2022-32 provides a simplified method for 

certain estates to obtain an extension of time to file a return on or before the fifth anniversary of the decedent’s 

death to elect portability of the deceased spousal unused 

exclusion (DSUE) amount. See Filing requirements, later, 

for more information.

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for 

Missing & Exploited Children® (NCMEC). Photographs of 

missing children selected by the Center may appear in 

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.

Introduction

This publication is designed to help those in charge (personal representatives) of the property (estate) of an individual who has died (decedent). It shows how to complete 

and file federal income tax returns and explains their responsibility to pay any taxes due on behalf of the decedent. An example of the decedent's final tax return, Form 

1040, U.S. Individual Income Tax Return, and the estate's 

income tax return, Form 1041, U.S. Income Tax Return for 

Estates and Trusts, are discussed in this publication.

The publication also explains how much money or 

property a taxpayer can give away during their lifetime or 

leave to their heirs at their death, before any tax will be 

owed. A discussion of Form 709, United States Gift (and 

Generation-Skipping Transfer) Tax Return, and Form 706, 

United States Estate (and Generation-Skipping Transfer) 

Tax Return, is included.

Also included in this publication are the following items.

• A checklist of the forms you may need and their due 

dates.

• A worksheet to reconcile amounts reported in the decedent's name on information returns including Forms 

W-2, Wage and Tax Statement; 1099-INT, Interest Income; 1099-DIV, Dividends and Distributions; etc. The 

worksheet will help you correctly determine the income to report on the decedent's final return and on 

the return for either the estate or a beneficiary.

Comments and suggestions. We welcome your comments about this publication and your suggestions for future editions.

You can send us comments through IRS.gov/

FormComments. Or, you can write to the Internal Revenue 

Service, Tax Forms and Publications, 1111 Constitution 

Ave. NW, IR-6526, Washington, DC 20224.

Although we can’t respond individually to each comment received, we do appreciate your feedback and will 

consider your comments and suggestions as we revise 

our tax forms, instructions, and publications. Don’t send 

tax questions, tax returns, or payments to the above address.

Getting answers to your tax questions. If you have a 

tax question not answered by this publication, or the How 

To Get Tax Help section at the end of this publication, go 

to the IRS Interactive Tax Assistant page at IRS.gov/

Help/ITA where you can find topics by using the search 

feature or by viewing the categories listed.

Getting tax forms, instructions, and publications. Go 

to IRS.gov/Forms to download current and prior-year 

forms, instructions, and publications.

Ordering tax forms, instructions, and publications. 

Go to IRS.gov/OrderForms to order current forms, instructions, and publications; call 800-829-3676 to order 

prior-year forms and instructions. The IRS will process 

your order for forms and publications as soon as possible. 

2 Publication 559 (2023)
Don’t resubmit requests you’ve already sent us. You can 

get forms and publications faster online.

Useful Items

You may want to see:

Publication

Armed Forces' Tax Guide

Form (and Instructions)

Application for Employer Identification Number

Notice Concerning Fiduciary Relationship

U.S. Individual Income Tax Return

U.S. Tax Return for Seniors

U.S. Income Tax Return for Estates and Trusts

United States Estate (and Generation-Skipping 

Transfer) Tax Return

United States Gift (and Generation-Skipping 

Transfer) Tax Return

Statement of Person Claiming Refund Due a 

Deceased Taxpayer

See How To Get Tax Help near the end of this publication 

for information about getting publications and forms. Also 

near the end of this publication is Table A, a checklist of 

forms and their due dates for the executor, administrator, 

or personal representative.

Personal Representative

A personal representative of an estate is an executor, administrator, or anyone who is in charge of the decedent's 

property. Generally, an executor (or executrix) is named in 

a decedent's will to administer the estate and distribute 

properties as the decedent has directed. An administrator 

(or administratrix) is usually appointed by the court if no 

will exists, if no executor was named in the will, or if the 

named executor can't or won't serve.

In general, an executor and an administrator perform 

the same duties and have the same responsibilities.

For estate tax purposes, if there is no executor or administrator appointed, qualified, and acting within the United States, the term “executor” includes anyone in actual 

or constructive possession of any property of the decedent. It includes, among others, the decedent's agents 

and representatives; safe-deposit companies, warehouse 

companies, and other custodians of property in this country; brokers holding securities of the decedent as collateral; and the debtors of the decedent who are in this country.

Duties

The primary duties of a personal representative are to collect all the decedent's assets, pay the decedent’s 

 3

 SS-4

 56

 1040

 1040-SR

 1041

 706

 709

 1310

creditors, and distribute the remaining assets to the heirs 

or other beneficiaries.

The personal representative must also perform the following duties.

• Apply for an employer identification number (EIN) for 

the estate.

• File all tax returns, including income, estate, and gift 

tax returns, when due.

• Pay the tax determined up to the date of discharge 

from duties.

Other duties of the personal representative in federal tax 

matters are discussed in other sections of this publication. 

If any beneficiary is a nonresident alien, see Pub. 515, 

Withholding of Tax on Nonresident Aliens and Foreign Entities, for information on the personal representative's duties as a withholding agent.

Penalty. There is a penalty for failure to file a tax return 

when due unless the failure is due to reasonable cause. 

Reliance on an agent (attorney, accountant, etc.) isn't reasonable cause for late filing. It is the personal representative's duty to file the returns for the decedent and the estate 

when due.

Identification number. The first action you should take if 

you’re the personal representative for the decedent is to 

apply for an EIN for the estate. You should apply for this 

number as soon as possible because you need to enter it 

on returns, statements, and other documents you file concerning the estate. You must also give the identification 

number to payers of interest and dividends and other payers who must file a return concerning the estate.

You can get an EIN by applying online at IRS.gov/EIN. 

Generally, if you apply online, you will receive your EIN immediately upon completing the application. You can also 

apply using Form SS-4. Generally, if you apply by mail, it 

takes about 4 weeks to get your EIN. See IRS.gov/

Businesses/Small-Businesses-&-Self-Employed/

Employer-ID-Numbers-EINs for other ways to apply.

Payers of interest and dividends report amounts on 

Forms 1099 using the identification number of the person 

to whom the account is payable. After a decedent's death, 

Forms 1099 must reflect the identification number (EIN, individual identification number (ITIN), or social security 

number (SSN)) of the estate or beneficiary to whom the 

amounts are payable. As the personal representative handling the estate, you must furnish this identification number to the payer. For example, if interest is payable to the 

estate, the estate's EIN must be provided to the payer and 

used to report the interest on Form 1099-INT. If the interest is payable to a surviving joint owner, the survivor's 

identification number, such as an SSN or ITIN, must be 

provided to the payer and used to report the interest.

If the estate or a survivor may receive interest or dividends after you inform the payer of the decedent's death, 

the payer should give you (or the survivor) a Form W-9, 

Publication 559 (2023) 3
Request for Taxpayer Identification Number and Certification, or a similar substitute form. Complete this form to inform the payer of the estate's (or if completed by the survivor, the survivor's) identification number and return it to 

the payer.

Don't use the deceased individual's identifying 

number to file an individual income tax return after 

the decedent's final tax return. Also don't use the 

decedent's identifying number to make estimated tax payments for a tax year after the year of death.

Penalty. If you don't include the EIN or the taxpayer 

identification number (TIN) of another person where it is 

required on a return, statement, or other document, you 

are liable for a penalty for each failure, unless you can 

show reasonable cause. You are also liable for a penalty if 

you don't give the TIN of another person when required on 

a return, statement, or other document.

Notice of fiduciary relationship. The term “fiduciary” 

means any person acting for another person. It applies to 

persons who have positions of trust on behalf of others. It 

generally includes a guardian, trustee, executor, administrator, receiver, or conservator. A personal representative 

for a decedent's estate is also a fiduciary.

Form 56. If you are appointed to act in a fiduciary capacity for another, you must file a written notice with the 

IRS stating this. Form 56 is used for this purpose. See the 

Instructions for Form 56 for filing requirements and other 

information.

File Form 56 as soon as all the necessary information 

(including the EIN) is available. It notifies the IRS that you, 

as the fiduciary, are assuming the powers, rights, duties, 

and privileges of the decedent. The notice remains in effect until you notify the IRS (by filing another Form 56) that 

your fiduciary relationship with the estate has terminated.

Termination of fiduciary relationship. Form 56 

should also be filed to notify the IRS if your fiduciary relationship is terminated or when a successor fiduciary is appointed if the estate hasn't been terminated. See Form 56 

and its instructions for more information.

At the time of termination of the fiduciary relationship, 

you may want to file Form 4810, Request for Prompt Assessment Under Internal Revenue Code Section 6501(d), 

and Form 5495, Request for Discharge From Personal Liability Under Internal Revenue Code Section 2204 or 

6905, to wind up your duties as fiduciary. See below for a 

discussion of these forms.

Request for prompt assessment (charge) of tax. The 

IRS ordinarily has 3 years from the date an income tax return is filed, or its due date, whichever is later, to charge 

any additional tax due. However, as a personal representative, you may request a prompt assessment of tax after 

the return has been filed. This reduces the time for making 

the assessment to 18 months from the date the written request for prompt assessment was received. This request 

can be made for any tax return (except the estate tax return) of the decedent or the decedent's estate. This may 

permit a quicker settlement of the tax liability of the estate 

CAUTION

!

and an earlier final distribution of the assets to the beneficiaries.

Form 4810. Form 4810 can be used for making this request. It must be filed separately from any other document.

As the personal representative for the decedent's estate, you are responsible for any additional taxes that may 

be due. You can request prompt assessment of any of the 

decedent's taxes (other than federal estate taxes) for any 

years for which the statutory period for assessment is 

open. This applies even though the returns were filed before the decedent's death.

Failure to report income. If you or the decedent 

failed to report substantial amounts of gross income (more 

than 25% of the gross income reported on the return) or 

filed a false or fraudulent return, your request for prompt 

assessment won't shorten the period during which the IRS 

may assess the additional tax. However, such a request 

may relieve you of personal liability for the tax if you didn't 

have knowledge of the unpaid tax.

Request for discharge from personal liability for tax. 

An executor can make a request for discharge from personal liability for a decedent's income, gift, and estate 

taxes. The request must be made after the returns for 

those taxes are filed. To make the request, file Form 5495. 

For this purpose, an executor is an executor or administrator that is appointed, qualified, and acting within the United States.

Within 9 months after receipt of the request, the IRS will 

notify the executor of the amount of taxes due. If this 

amount is paid, the executor will be discharged from personal liability for any future deficiencies. If the IRS hasn’t 

notified the executor at the end of the 9-month period, the 

executor will be discharged from personal liabilities.

Even if the executor is discharged from personal 

liability, the IRS will still be able to assess tax deficiencies against the executor to the extent the executor still has any of the decedent's property.

Insolvent estate. Generally, if a decedent's estate is insufficient to pay all the decedent's debts, the debts due to 

the United States must be paid first. Both the decedent's 

federal income tax liabilities at the time of death and the 

estate's income tax liability are debts due to the United 

States. The personal representative of an insolvent estate 

is personally responsible for any tax liability of the decedent or of the estate if the personal representative had notice of such tax obligations or failed to exercise due care in 

determining if such obligations existed before distribution 

of the estate's assets and before being discharged from 

duties. The extent of such personal responsibility is the 

amount of any other payments made before paying the 

debts due to the United States, except where such other 

debt paid has priority over the debts due to the United 

States. Income tax liabilities need not be formally assessed for the personal representative to be liable if the 

personal representative was aware or should have been 

aware of their existence.

CAUTION

!

4 Publication 559 (2023)
Fees Received by Personal 

Representatives

All personal representatives must include fees paid to 

them from an estate in their gross income. If you aren't in 

the trade or business of being an executor (for instance, 

you are the executor of a friend's or relative's estate), report these fees on your Schedule 1 (Form 1040), line 8z. If 

you are in the trade or business of being an executor, report fees received from the estate as self-employment income on Schedule C (Form 1040), Profit or Loss From 

Business.

If the estate operates a trade or business and you, as 

executor, actively participate in the trade or business while 

fulfilling your duties, any fees you receive related to the 

operation of the trade or business must be reported as 

self-employment income on Schedule C (Form 1040).

Final Income Tax Return for 

Decedent—Form 1040 or 

1040-SR

The personal representative (defined earlier) must file the 

final income tax return (Form 1040 or 1040-SR) of the decedent for the year of death and any returns not filed for 

preceding years. A surviving spouse, under certain circumstances, may have to file the returns for the decedent. 

See Joint Return, later.

Return for preceding year. If an individual died after the 

close of the tax year, but before the return for that year 

was filed, the return for the year just closed won't be the 

final return. The return for that year will be a regular return 

and the personal representative must file it.

Example. S. Smith died on March 21, 2023, before filing the 2022 tax return. The personal representative must 

file the 2022 return by April 15, 2023. The final tax return 

covering the period from January 1, 2023, to March 20, 

2023, is due April 15, 2024.

Note. See When and Where To File, later, if the due 

date falls on a weekend or legal holiday. See Pub. 509, 

Tax Calendars, for a list of all legal holidays.

Name, Address, and Signature

Write the word “DECEASED,” the decedent's name, and 

the date of death across the top of the tax return. If filing a 

joint return, write the name and address of the decedent 

and the surviving spouse in the name and address fields. 

If a joint return isn't being filed, write the decedent's name 

in the name field and the personal representative's name 

and address in the address field.

Third party designee. You can check the “Yes” box in 

the Third Party Designee area on Form 1040 or 1040-SR 

to authorize the IRS to discuss the return with a friend, a 

family member, or any other person you choose. This allows the IRS to call the person you identified as the designee to answer any questions that may arise during the 

processing of the return. It also allows the designee to 

perform certain actions. See the Instructions for Form 

1040 (and 1040-SR) for details.

Signature. If a personal representative has been appointed, that person must sign the return. If it is a joint return, 

the surviving spouse must also sign it. If no personal representative has been appointed, the surviving spouse (on 

a joint return) signs the return and writes in the signature 

area “Filing as surviving spouse.” If no personal representative has been appointed and if there is no surviving 

spouse, the person in charge of the decedent's property 

must file and sign the return as “personal representative.”

Paid preparer. If you pay someone to prepare, assist in 

preparing, or review the tax return, that person must sign 

the return and fill in the other blanks in the Paid Preparer 

Use Only area of the return. See the Instructions for Form 

1040 (and 1040-SR) for details.

When and Where To File

The final income tax return is due at the same time the decedent's return would have been due had death not occurred. A final return for a decedent who was a calendar year 

taxpayer is generally due on April 15 following the year of 

death, regardless of when during that year death occurred. However, when the due date falls on a Saturday, Sunday, or legal holiday, the return is filed timely if filed by the 

next business day.

Generally, you must file the final income tax return of 

the decedent with the Internal Revenue Service Center for 

the place where you live. A tax return for a decedent can 

be electronically filed. A personal representative may also 

obtain an income tax filing extension on behalf of a decedent.

Filing Requirements

The gross income, age, and filing status of a decedent 

generally determine whether a return must be filed. Gross 

income is all income received by an individual from any 

source in the form of money, goods, property, and services that isn't tax-exempt. It includes gross receipts from 

self-employment, but if the business involves manufacturing, merchandising, or mining, subtract any cost of goods 

sold. In general, filing status depends on whether the decedent was considered single or married at the time of 

death. See the income tax return instructions or Pub. 501, 

Dependents, Standard Deduction, and Filing Information.

Refund

A return must be filed to obtain a refund if tax was withheld 

from salaries, wages, pensions, or annuities, or if estimated tax was paid, even if a return isn't otherwise required 

to be filed. Also, the decedent may be entitled to other 

credits that result in a refund. These advance payments of 

Publication 559 (2023) 5
tax and credits are discussed later under Credits, Other 

Taxes, and Payments.

Form 1310, Statement of Person Claiming Refund 

Due a Deceased Taxpayer. Form 1310 doesn't have to 

be filed if you are claiming a refund and either of the following applies to you.

• You are a surviving spouse filing an original or amended joint return with the decedent.

• You are a court-appointed or certified personal representative filing the decedent’s original return and a 

copy of the court certificate showing your appointment 

is attached to the return.

If the personal representative is filing a claim for refund 

on Form 1040-X, Amended U.S. Individual Income Tax 

Return, or Form 843, Claim for Refund and Request for 

Abatement, and the court certificate has already been 

filed with the IRS, attach Form 1310 and write “Certificate 

Previously Filed” at the bottom of the form.

Example. E. Green died before filing the tax return. 

You were appointed the personal representative for E. 

Green's estate, and you file the Form 1040 or 1040-SR 

showing a refund due. You don't need Form 1310 to claim 

the refund if you attach a copy of the court certificate to 

the tax return showing you were appointed the personal 

representative.

If you are a surviving spouse and you receive a 

tax refund check in both your name and your deceased spouse's name, you can have the check 

reissued in your name alone. Return the joint-name check 

marked “VOID” along with Form 1310 to your local IRS office or the service center where you mailed your return, 

along with a written request for reissuance of the refund 

check. A new check will be issued in your name and 

mailed to you.

Death certificate. When filing the decedent's final income tax return, don't attach the death certificate or other 

proof of death to the final return. Instead, keep it for your 

records and provide it if requested.

Nonresident Alien

If the decedent was a nonresident alien who would have 

had to file Form 1040-NR, U.S. Nonresident Alien Income 

Tax Return, you must file that form for the decedent's final 

tax year. See the Instructions for Form 1040-NR for the filing requirements, due date, and where to file.

Joint Return

Generally, the personal representative and the surviving 

spouse can file a joint return for the decedent and the surviving spouse. However, the surviving spouse alone can 

file the joint return if no personal representative has been 

appointed before the due date for filing the final joint return 

for the year of death. This also applies to the return for the 

preceding year if the decedent died after the close of the 

preceding tax year and before filing the return for that year. 

TIP

The income of the decedent that was includible on the decedent’s return for the year up to the date of death (see 

Income To Include, later) and the income of the surviving 

spouse for the entire year must be included on the final 

joint return.

A final joint return with the decedent can't be filed if the 

surviving spouse remarried before the end of the year of 

the decedent's death. The filing status of the decedent in 

this instance is married filing a separate return.

For information about tax benefits to which a surviving 

spouse may be entitled, see Tax Benefits for Survivors, 

later, under Other Tax Information.

Personal representative may revoke joint return election. A court-appointed personal representative may revoke an election to file a joint return previously made by 

the surviving spouse alone. This is done by filing a separate return for the decedent within 1 year from the due 

date of the return (including any extensions). The joint return filed by the surviving spouse will then be regarded as 

the separate return of that spouse by excluding the decedent's items and refiguring the tax liability.

Relief from joint liability. In some cases, one spouse 

may be relieved of joint liability for tax, interest, and penalties on a joint return for items of the other spouse that 

were incorrectly reported on the joint return. If the decedent qualified for this relief while alive, the personal representative can pursue an existing request, or file a request, 

for relief from joint liability. For information on requesting 

this relief, see Pub. 971, Innocent Spouse Relief.

Income To Include

The decedent's income includible on the final return is 

generally determined as if the person were still alive except that the tax period is usually shorter because it ends 

on the date of death. The method of accounting regularly 

used by the decedent before death also determines the income includible on the final return. This section explains 

how some types of income are reported on the final return.

For more information about accounting methods, see 

Pub. 538, Accounting Periods and Methods.

Cash Method

If the decedent accounted for income under the cash 

method, only those items actually or constructively received before death are included on the final return.

Constructive receipt of income. Interest from coupons 

on the decedent's bonds is constructively received by the 

decedent if the coupons matured in the decedent's final 

tax year but had not been cashed. Include the interest income on the final return.

Generally, a dividend is considered constructively received if it was available for use by the decedent without 

restriction. If the corporation customarily mailed its dividend checks, the dividend was includible when received. 

If the individual died between the time the dividend was 

6 Publication 559 (2023)
declared and the time it was received in the mail, the decedent didn't constructively receive it before death. Don't 

include the dividend in the final return.

Accrual Method

Generally, under an accrual method of accounting, income is reported when earned.

If the decedent used an accrual method, only the income items normally accrued before death are included 

on the final return.

Interest and Dividend Income (Forms 1099)

Form(s) 1099 reporting interest and dividends earned by 

the decedent before death should be received and the 

amounts included on the decedent's final return. A separate Form 1099 should show the interest and dividends 

earned after the date of the decedent's death and paid to 

the estate or other recipient that must include those 

amounts on its return. You can request corrected Forms 

1099 if these forms don't properly reflect the right recipient 

or amounts.

For example, a Form 1099-INT, reporting interest payable to the decedent, may include income that should be 

reported on the final income tax return of the decedent, as 

well as income that the estate or other recipient should report, either as income earned after death or as income in 

respect of the decedent (discussed later). For income 

earned after death, you should ask the payer for a Form 

1099 that properly identifies the recipient (by name and 

identification number) and the proper amount. If that isn't 

possible, or if the form includes an amount that represents 

income in respect of the decedent, report the interest as 

shown under How to report next.

See U.S. savings bonds acquired from decedent under 

Specific Types of Income in Respect of a Decedent, later, 

for information on savings bond interest that may have to 

be reported on the final return.

How to report. If you are preparing the decedent's final 

return and you have received a Form 1099-INT for the decedent that includes amounts belonging to the decedent 

and to another recipient (the decedent's estate or another 

beneficiary), report the total interest shown on Form 

1099-INT on Schedule B (Form 1040), Interest and Ordinary Dividends. Next, enter a subtotal of the interest 

shown on Forms 1099, and the interest reportable from 

other sources for which you didn't receive Forms 1099. 

Then, show any interest (including any interest you receive as a nominee) belonging to another recipient separately and subtract it from the subtotal. Identify the amount 

of this adjustment as “Nominee Distribution” or other appropriate designation.

Report dividend income for which you received a Form 

1099-DIV on the appropriate schedule using the same 

procedure.

Note. If the decedent received amounts as a nominee, 

you must give the actual owner a Form 1099, unless the 

owner is the decedent's spouse. See the General 

Instructions for Certain Information Returns for more information on filing Forms 1099.

Partnership Income

The death of a partner closes the partnership's tax year for 

that partner. Generally, it doesn't close the partnership's 

tax year for the remaining partners. The decedent's distributive share of partnership items must be figured as if 

the partnership's tax year ended on the date the partner 

died. To avoid an interim closing of the partnership books, 

the partners can agree to estimate the decedent's distributive share by prorating the amounts the partner would 

have included for the entire partnership tax year.

On the decedent's final return, include the decedent's 

distributive share of partnership items for the following periods.

1. The partnership's tax year that ended within or with 

the decedent's final tax year (the year ending on the 

date of death).

2. The period, if any, from the end of the partnership's 

tax year in (1) to the decedent's date of death.

Example. M. Smith was a partner in XYZ partnership 

and reported the income on a tax year ending December 

31. The partnership uses a tax year ending June 30. M. 

Smith died August 31, 2023, and the estate established its 

tax year through August 31.

The distributive share of partnership items based on 

the decedent's partnership interest is reported as follows.

• Final Return for the Decedent—January 1 through August 31, 2023, includes XYZ partnership items from 

(a) the partnership tax year ending June 30, 2023; and 

(b) the partnership tax year beginning July 1, 2023, 

and ending August 31, 2023 (the date of death).

• Income Tax Return of the Estate—September 1, 2023, 

through August 31, 2024, includes XYZ partnership 

items for the period September 1, 2023, through June 

30, 2024.

S Corporation Income

If the decedent was a shareholder in an S corporation, include on the final return the decedent's share of the S corporation's items of income, loss, deduction, and credit for 

the following periods.

1. The corporation's tax year that ended within or with 

the decedent's final tax year (the year ending on the 

date of death).

2. The period, if any, from the end of the corporation's 

tax year in (1) to the decedent's date of death.

Self-Employment Income

Include self-employment income actually or constructively 

received or accrued, depending on the decedent's accounting method. For self-employment tax purposes only, 

Publication 559 (2023) 7
the decedent's self-employment income will include the 

decedent's distributive share of a partnership's income or 

loss through the end of the month in which death occurred. For this purpose, the partnership's income or loss is 

considered to be earned ratably over the partnership's tax 

year.

Community Income

If the decedent was married and domiciled in a community 

property state, half of the income received and half of the 

expenses paid during the decedent's tax year by either the 

decedent or spouse may be considered to be the income 

and expenses of the other. For more information, see Pub. 

555, Community Property.

HSA, Archer MSA, or Medicare Advantage 

MSA

The treatment of an HSA (health savings account), an 

Archer MSA (medical savings account), or a Medicare Advantage MSA at the death of the account holder depends 

on who acquires the interest in the account. If the decedent's estate acquires the interest, the fair market value 

(FMV) of the assets in the account on the date of death is 

included in income on the decedent's final return. The estate tax deduction, discussed later, doesn't apply to this 

amount.

If a beneficiary acquires the interest, see the discussion 

under Income in Respect of a Decedent, later. For other 

information on HSAs, Archer MSAs, or Medicare Advantage MSAs, see Pub. 969, Health Savings Accounts and 

Other Tax-Favored Health Plans.

Coverdell Education Savings Account (ESA)

Generally, the balance in a Coverdell ESA must be distributed within 30 days after the individual for whom the account was established reaches age 30, or dies, whichever 

is earlier. The treatment of the Coverdell ESA at the death 

of an individual under age 30 depends on who acquires 

the interest in the account. If the decedent's estate acquires the interest, the earnings on the account must be 

included on the final income tax return of the decedent. 

The estate tax deduction, discussed later, doesn't apply to 

this amount. If a beneficiary acquires the interest, see the 

discussion under Income in Respect of a Decedent, later.

The age 30 limitation doesn't apply if the individual for 

whom the account was established or the beneficiary that 

acquires the account is an individual with special needs. 

This includes an individual who, because of a physical, 

mental, or emotional condition (including a learning disability), requires additional time to complete the individual’s 

education.

For more information on Coverdell ESAs, see Pub. 970, 

Tax Benefits for Education.

Accelerated Death Benefits

Accelerated death benefits are amounts received under a 

life insurance contract before the death of the insured individual. These benefits also include amounts received on 

the sale or assignment of the contract to a viatical settlement provider.

Generally, if the decedent received accelerated death 

benefits on the life of a terminally or chronically ill individual, whether on the decedent’s own life or on the life of another person, those benefits aren't included in the decedent's income. For more information, see the discussion 

under Gifts, Insurance, and Inheritances, under Other Tax 

Information, later.

Deductions

Generally, the rules for deductions allowed to an individual 

also apply to the decedent's final income tax return. Show 

on the final return deductible items the decedent paid (or 

accrued, if the decedent reported deductions on an accrual method) before death. This section contains a detailed discussion of medical expenses because the tax 

treatment of the decedent's medical expenses can be different. See Medical Expenses, later.

Standard Deduction

If you don't itemize deductions on the final return, the full 

amount of the appropriate standard deduction is allowed 

regardless of the date of death. For information on the appropriate standard deduction, see the Form 1040 and 

1040-SR instructions or Pub. 501.

Medical Expenses

Medical expenses paid before death by the decedent are 

deductible, subject to limits, on the final income tax return 

if deductions are itemized. This includes expenses for the 

decedent, as well as for the decedent's spouse and dependents.

Qualified medical expenses aren't deductible if 

paid with a tax-free distribution from an HSA or an 

Archer MSA.

Election for decedent's expenses. Medical expenses 

not paid before death are liabilities of the estate and are 

shown on the federal estate tax return (Form 706). However, if medical expenses for the decedent are paid out of 

the estate during the 1-year period beginning with the day 

after death, you can elect to treat all or part of the expenses as paid by the decedent at the time they were incurred.

If you make the election, you can claim all or part of the 

expenses on the decedent's income tax return (if deductions are itemized) rather than on the federal estate tax return (Form 706). You can deduct expenses incurred in the 

year of death on the final income tax return. You should file 

an amended return (Form 1040-X) for medical expenses 

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8 Publication 559 (2023)
incurred in an earlier year, unless the statutory period for 

filing a claim for that year has expired.

The amount you can deduct on the income tax return is 

the amount above 7.5% of AGI. Amounts not deductible 

because of this percentage can't be claimed on the federal estate tax return.

Making the election. You make the election by attaching a statement, in duplicate, to the decedent's income tax return or amended return. The statement must 

state that you haven't claimed the amount as an estate tax 

deduction, and that the estate waives the right to claim the 

amount as a deduction. This election applies only to expenses incurred for the decedent, not to expenses incurred to provide medical care for dependents.

Example. R. Brown used the cash method of accounting and filed the income tax return on a calendar year basis. R. Brown died on June 1, 2023, at the age of 78, after 

incurring $800 in medical expenses. Of that amount, $500 

was incurred in 2022 and $300 was incurred in 2023. R. 

Brown itemized the deductions when the 2022 income tax 

return was filed. The personal representative of the estate 

paid the entire $800 liability in August 2023.

The personal representative may file an amended return (Form 1040-X) for 2022 claiming the $500 medical 

expense as a deduction, subject to the 7.5% limit. The 

$300 of expenses incurred in 2023 can be deducted on 

the final income tax return if deductions are itemized, subject to the 7.5% limit. The personal representative must 

file a statement in duplicate with each return stating that 

these amounts have not been claimed on the federal estate tax return (Form 706), and waiving the right to claim 

such a deduction on Form 706 in the future.

Medical expenses not paid by estate. If you paid medical expenses for your deceased spouse or dependent, 

claim the expenses on your tax return for the year in which 

you paid them, whether they are paid before or after the 

decedent's death. If the decedent was a child of divorced 

or separated parents, the medical expenses can usually 

be claimed by both the custodial parent and the noncustodial parent to the extent paid by that parent during the 

year.

Insurance reimbursements. Insurance reimbursements 

of previously deducted medical expenses due a decedent 

at the time of death and later received by the decedent's 

estate are includible in the income tax return of the estate 

(Form 1041) for the year the reimbursements are received. The reimbursements are also includible in the decedent's gross estate.

No deduction for funeral expenses can be taken 

on the final Form 1040 or 1040-SR of a decedent. 

These expenses may be deductible for estate tax 

purposes on Form 706.

Deduction for Losses

A decedent's NOL deduction from a prior year and any 

capital losses (including capital loss carryovers) can be 

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deducted only on the decedent's final income tax return. 

See Pub. 536. You can't deduct any unused NOL or capital loss on the estate's income tax return.

Note. Generally, an NOL arising in a tax year beginning in 2021 or later may not be carried back and instead 

must be carried forward indefinitely. However, farming losses arising in tax years beginning in 2021 or later may be 

carried back 2 years and carried forward indefinitely.

At-risk loss limits. Special at-risk rules apply to most activities that are engaged in as a trade or business or for 

the production of income.

These rules limit the deductible loss to the amount for 

which the individual was considered at-risk in the activity. 

An individual will generally be considered at-risk to the extent of the money and the adjusted basis of property that 

are contributed to the activity and certain borrowed 

amounts for use in the activity. An individual will be considered at-risk for amounts borrowed only if the individual 

was personally liable for the repayment or if the amounts 

borrowed were secured by property other than that used 

in the activity. The individual isn't considered at-risk for 

borrowed amounts if the lender has an interest (other than 

as a creditor) in the activity or if the lender is related to a 

person (other than the taxpayer) who has an interest in the 

activity. For more information, see Pub. 925, Passive Activity and At-Risk Rules.

Passive activity rules. A passive activity is any trade or 

business activity in which the taxpayer doesn't materially 

participate. To determine material participation, see Pub. 

925. Rental activities are passive activities regardless of 

the taxpayer's participation, unless the taxpayer meets 

certain eligibility requirements.

Individuals, estates, and trusts can offset passive activity losses only against passive activity income. Passive 

activity losses or credits not allowed in 1 tax year can be 

carried forward to the next year.

If a passive activity interest is transferred because a 

taxpayer dies, the accumulated unused passive activity 

losses are allowed as a deduction against the decedent's 

income in the year of death. Losses are allowed only to 

the extent they are greater than the excess of the transferee's (recipient of the interest transferred) basis in the property over the decedent's adjusted basis in the property immediately before death. The part of the accumulated 

losses equal to the excess isn't allowed as a deduction for 

any tax year.

Use Form 8582, Passive Activity Loss Limitations, to 

summarize losses and income from passive activities and 

to figure the amounts allowed. For more information, see 

Pub. 925.

Credits, Other Taxes, and Payments

Discussed below are some of the tax credits, types of 

taxes that may be owed, income tax withheld, and estimated tax payments reported on the final return of a decedent.

Publication 559 (2023) 9
Credits

On the final income tax return, you can claim any tax credits that applied to the decedent before death. Some of 

these credits are discussed next.

Earned income credit. If the decedent was an eligible 

individual, you can claim the earned income credit on the 

decedent's final return even though the return covers less 

than 12 months. If the allowable credit is more than the tax 

liability for the year, the excess is refunded.

For more information, see Pub. 596, Earned Income 

Credit (EIC).

Credit for the elderly or the disabled. This credit is allowable on a decedent's final income tax return if the decedent met both of the following requirements in the year 

of death.

• The decedent was a “qualified individual.”

• The decedent had income (AGI and nontaxable social 

security and pensions) less than certain limits.

For details on qualifying for or figuring the credit, see 

Pub. 524, Credit for the Elderly or the Disabled.

Child tax credit. If the decedent had a qualifying child, 

you may be able to claim the child tax credit on the decedent's final return even though the return covers less than 

12 months. You may be able to claim the additional child 

tax credit and get a refund if the credit is more than the decedent's liability. For more information, see the Instructions for Form 1040.

Adoption credit. Depending upon when the adoption 

was finalized, this credit may be taken on a decedent's final income tax return if either of the following applies.

• The decedent adopted an eligible child and paid qualified adoption expenses.

• The decedent has a carryforward of an adoption credit 

from a prior year.

Also, if the decedent is survived by a spouse who 

meets the filing status of qualifying surviving spouse, unused adoption credit may be carried forward and used following the death of the decedent. See Form 8839, Qualified Adoption Expenses, and its instructions for more 

details.

General business tax credit. The general business 

credit available to a taxpayer is limited. Any unused credit 

arising in a tax year beginning after 1997 has a 1-year carryback and a 20-year carryforward period.

After the carryforward period, a deduction may be allowed for any unused business credit. If the taxpayer dies 

before the end of the carryforward period, the deduction is 

generally allowed in the year of death.

For more information on the general business credit, 

see Pub. 334, Tax Guide for Small Business.

Other Taxes

Taxes other than income tax that may be owed on the final 

return of a decedent include self-employment tax and alternative minimum tax, which are reported on Form 1040 

or 1040-SR.

Self-employment tax. Self-employment tax may be 

owed on the final return if either of the following applied to 

the decedent in the year of death.

1. Net earnings from self-employment (excluding income 

described in (2)) were $400 or more.

2. Wages from services performed as a church employee were $108.28 or more.

Alternative minimum tax (AMT). The tax laws give special treatment to certain types of income and allow special 

deductions and credits for certain types of expenses. The 

AMT was enacted so taxpayers who benefit from these 

laws still pay at least a minimum amount of tax. In general, 

the AMT is the excess of the tentative minimum tax over 

the regular tax shown on the return.

Form 6251. Use Form 6251, Alternative Minimum 

Tax—Individuals, to determine if this tax applies to the decedent. See the form instructions for information on when 

you must attach Form 6251 to Form 1040 or 1040-SR.

Form 8801. If the decedent paid AMT in a previous 

year or had a credit carryforward, the decedent may be eligible for a minimum tax credit. See Form 8801, Credit for 

Prior Year Minimum Tax—Individuals, Estates, and Trusts.

Payments of Tax

The income tax withheld from the decedent's salary, wages, pensions, or annuities, and the amount paid as estimated tax are credits (advance payments of tax) that must 

be claimed on the final return.

Tax Forgiveness for Armed Forces 

Members, Victims of Terrorism, and 

Astronauts

Income tax liability may be forgiven for a decedent who 

dies due to service in a combat zone, due to military or 

terrorist actions, as a result of a terrorist attack, or while 

serving in the line of duty as an astronaut.

Combat Zone

If a member of the Armed Forces of the United States dies 

while in active service in a combat zone or from wounds, 

disease, or injury incurred in a combat zone, the decedent's income tax liability is abated (forgiven) for the entire 

year in which death occurred and for any prior tax year 

ending on or after the first day the person served in a combat zone in active service. For this purpose, a qualified 

hazardous duty area is treated as a combat zone.

10 Publication 559 (2023)
If the tax (including interest, additions to the tax, and 

additional amounts) for these years has been assessed, 

the assessment will be forgiven. If the tax has been collected (regardless of the date of collection), that tax will be 

credited or refunded.

Any of the decedent's income tax for tax years before 

those mentioned above that remains unpaid as of the actual (or presumptive) date of death won't be assessed. If 

any unpaid tax (including interest, additions to the tax, and 

additional amounts) has been assessed, this assessment 

will be forgiven. Also, if any tax was collected after the 

date of death, that amount will be credited or refunded.

The date of death of a member of the Armed Forces reported as missing in action or as a prisoner of war is the 

date the member’s name is removed from missing status 

for military pay purposes. This is true even if death actually 

occurred earlier.

For other tax information for members of the Armed 

Forces, see Pub. 3, Armed Forces' Tax Guide.

Military or Terrorist Actions

The decedent's income tax liability is forgiven if, at death, 

the decedent was a military or civilian employee of the 

United States who died because of wounds or injury incurred:

• While a U.S. employee, and

• In a military or terrorist action.

The forgiveness applies to the tax year in which death 

occurred and for any earlier tax year, beginning with the 

year before the year in which the wounds or injury occurred.

Example. The income tax liability of a civilian employee of the United States who died in 2023 because of 

wounds incurred while a U.S. employee in a terrorist attack that occurred in 2017 will be forgiven for 2023 and for 

all prior tax years in the period 2016 through 2022. Refunds are allowed for the tax years for which the period for 

filing a claim for refund hasn't ended, as discussed later.

Military or terrorist action defined. A military or terrorist action means the following.

• Any terrorist activity that most of the evidence indicates was directed against the United States or any of 

its allies.

• Any military action involving the U.S. Armed Forces 

and resulting from violence or aggression against the 

United States or any of its allies, or the threat of such 

violence or aggression.

Terrorist activity includes criminal offenses intended to 

coerce, intimidate, or retaliate against the government or 

civilian population. Military action doesn't include training 

exercises. Any multinational force in which the United 

States is participating is treated as an ally of the United 

States.

Determining if a terrorist activity or military action 

has occurred. You may rely on published guidance from 

the IRS to determine if a particular event is considered a 

terrorist activity or military action.

Specified Terrorist Victim

The Victims of Terrorism Tax Relief Act of 2001 (the Act) 

provides tax relief for those injured or killed as a result of 

terrorist attacks, certain survivors of those killed as a result of terrorist attacks, and others who were affected by 

terrorist attacks. Under the Act, the federal income tax liability of those killed in the following attacks (specified terrorist victim) is forgiven for certain tax years.

• The April 19, 1995, terrorist attack on the Alfred P. 

Murrah Federal Building (Oklahoma City).

• The September 11, 2001, terrorist attacks.

• The terrorist attacks involving anthrax occurring after 

September 10, 2001, and before January 1, 2002.

The Act also exempts from federal income tax the following types of income.

• Qualified disaster relief payments made after September 10, 2001, to cover personal, family, living, or funeral expenses incurred because of a terrorist attack.

• Certain disability payments (including Social Security 

Disability Insurance (SSDI) payments) received in tax 

years ending after September 10, 2001, for injuries 

sustained in a terrorist attack.

• Certain death benefits paid by an employer to the survivor of an employee because the employee died as a 

result of a terrorist attack.

• Payments from the September 11th Victim Compensation Fund 2001.

The Act also reduces the estate tax of individuals who 

die as a result of a terrorist attack. See Pub. 3920, Tax 

Relief for Victims of Terrorist Attacks for more information.

Astronauts

Legislation extended the tax relief available under the Victims of Terrorism Tax Relief Act of 2001 (the Act) to astronauts who died in the line of duty after December 31, 

2002. The decedent's income tax liability is forgiven for 

the tax year in which death occurs, and for the tax year 

prior to death. For information on death benefit payments 

and the reduction of federal estate taxes, see Pub. 3920. 

However, the discussions in that publication under Death 

Benefits and Estate Tax Reduction should be modified for 

astronauts (for example, by using the date of death of the 

astronaut instead of September 11, 2001).

For more information on the Act, see Pub. 3920.

Claim for Credit or Refund

If any of these tax-forgiveness situations applies to a prior 

year tax, any tax paid for which the period for filing a claim 

Publication 559 (2023) 11
hasn't ended will be credited or refunded. If any tax is still 

due, it will be canceled. The normal period for filing a 

claim for credit or refund is 3 years after the return was 

filed or 2 years after the tax was paid, whichever is later.

If death occurred in a combat zone or from wounds, 

disease, or injury incurred in a combat zone, the period for 

filing the claim is extended by:

1. The amount of time served in the combat zone (including any period in which the individual was in missing status), plus

2. The period of continuous qualified hospitalization for 

injury from service in the combat zone, if any, plus

3. The next 180 days.

Qualified hospitalization means any hospitalization outside the United States and any hospitalization in the United States of not more than 5 years.

This extended period for filing the claim also applies to 

a member of the Armed Forces who was deployed outside 

the United States in a designated contingency operation.

Filing a claim. Use the following procedures to file a 

claim.

• If a U.S. individual income tax return (Form 1040 or 

1040-SR) hasn't been filed, you should make a claim 

for refund of any withheld income tax or estimated tax 

payments by filing Form 1040 or 1040-SR. Form W-2 

must accompany all returns.

• If a U.S. individual income tax return has been filed, 

you should make a claim for refund by filing Form 

1040-X. You must file a separate Form 1040-X for 

each year in question.

You must file these returns and claims at the following 

address for regular mail (U.S. Postal Service).

Internal Revenue Service

333 W. Pershing, Stop 6503, P5

Kansas City, MO 64108

Identify all returns and claims for refund by writing “Iraqi 

Freedom—KIA,” “Enduring Freedom—KIA,” “Kosovo Operation—KIA,” “Desert Storm—KIA,” or “Former Yugoslavia—KIA” in bold letters on the top of page 1 of the return 

or claim. On the applicable return, write the same phrase 

on the line for total tax. If the individual was killed in a terrorist or military action, put “KITA” on the front of the return 

and on the line for total tax.

Include an attachment showing the computation of the 

decedent's tax liability and a computation of the amount to 

be forgiven. On joint returns, make an allocation of the tax 

as described later under Joint returns. If you can't make a 

proper allocation, attach a statement of all income and deductions allocable to each spouse and the IRS will make 

the proper allocation.

You must attach Form 1310 to all returns and claims for 

refund. However, for exceptions to filing Form 1310, see 

Form 1310, Statement of Person Claiming Refund Due a 

Deceased Taxpayer, under Refund, earlier.

You must also attach proof of death that includes a 

statement that the individual was a U.S. employee on the 

date of injury and on the date of death and died as the result of a military or terrorist action. For military and civilian 

employees of the Department of Defense, attach DD Form 

1300, Report of Casualty. For other U.S. civilian employees killed in the United States, attach a death certificate 

and a certification (letter) from the federal employer. For 

other U.S. civilian employees killed overseas, attach a certification from the Department of State.

If you don't have enough tax information to file a timely 

claim for refund, you can suspend the period for filing a 

claim by filing Form 1040-X. Attach Form 1310, any required documentation currently available, and a statement 

that you will file an amended claim as soon as you have 

the required tax information.

Joint returns. If a joint return was filed, only the decedent's part of the income tax liability is eligible for forgiveness. Determine the decedent's tax liability as follows.

1. Figure the income tax for which the decedent would 

have been liable if a separate return had been filed.

2. Figure the income tax for which the spouse would 

have been liable if a separate return had been filed.

3. Multiply the joint tax liability by a fraction. The numerator of the fraction is the amount in (1) above. The denominator of the fraction is the total of (1) and (2).

The resulting amount from (3) above is the decedent's 

tax liability eligible for forgiveness. See also Worksheet B 

in Pub. 3920.

Filing Reminders

To minimize the time needed to process the decedent's final return and issue any refund, be sure to follow these 

procedures.

1. Write “DECEASED,” the decedent's name, and the 

date of death across the top of the tax return.

2. If a personal representative has been appointed, the 

personal representative must sign the return. If it is a 

joint return, the surviving spouse must also sign it.

3. If you are the decedent's spouse filing a joint return 

with the decedent and no personal representative has 

been appointed, write “Filing as surviving spouse” in 

the area where you sign the return.

4. If no personal representative has been appointed and 

if there is no surviving spouse, the person in charge of 

the decedent's property must file and sign the return 

as “personal representative.”

5. To claim a refund for the decedent, do the following.

a. If you are the decedent's spouse filing a joint return with the decedent, file only the tax return to 

claim the refund.

b. If you are the personal representative and the return isn't a joint return filed with the decedent's 

surviving spouse, file the return and attach a copy 

12 Publication 559 (2023)
of the certificate that shows your appointment by 

the court. (A power of attorney or a copy of the decedent's will isn't acceptable evidence of your appointment as the personal representative.) If you 

are filing an amended return, attach Form 1310 

and a copy of the certificate of appointment (or, if 

you have already sent the certificate of appointment to the IRS, write “Certificate Previously Filed” 

at the bottom of Form 1310).

c. If you aren't filing a joint return as the surviving 

spouse and a personal representative hasn't been 

appointed, file the return and attach Form 1310.

Other Tax Information

Discussed below is information about the effect of an individual's death on the income tax liability of the survivors 

(including the surviving spouse), the beneficiaries, and the 

estate.

Tax Benefits for Survivors

Survivors can qualify for certain benefits when filing their 

own income tax returns.

Joint return by surviving spouse. A surviving spouse 

can file a joint return for the year of death and may qualify 

for special tax rates for the following 2 years, as explained 

under Qualifying surviving spouse, later.

Decedent as your dependent. If the decedent qualified 

as your dependent for a part of the year before death, you 

can claim the dependent on your tax return, regardless of 

when death occurred during the year.

If the decedent was your qualifying child, you may be 

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; 

or Form 1040-NR, line 19. To determine if you qualify for 

the earned income credit, see the instructions for Form 

1040 and 1040-SR, line 27.

Qualifying surviving spouse. If your spouse died within 

the 2 tax years preceding the year for which your return is 

being filed, you may be eligible to claim the filing status of 

qualifying surviving spouse with dependent child and 

qualify to use the married-filing-jointly tax rates.

Requirements. Generally, you qualify for this special 

benefit if you meet all of the following requirements.

• You were entitled to file a joint return with your spouse 

for the year of death—whether or not you actually filed 

jointly.

• You didn't remarry before the end of the current tax 

year.

• You have a child, stepchild, or foster child who qualifies as your dependent for the tax year.

• You provide more than half the cost of maintaining 

your home, which is the principal residence of that 

child for the entire year except for temporary absences.

Example. Skyler’s spouse, Cameron, died in 2021. 

Skyler hasn't remarried and continued throughout 2022 

and 2023 to maintain a home for self and dependent child. 

For 2021, Skyler was entitled to file a joint return with Cameron. For 2022 and 2023, Skyler qualifies to file as a 

qualifying surviving spouse with dependent child. For later 

years, Skyler may qualify to file as head of household.

Figuring your tax. Check the qualifying surviving 

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 

spouse is the year of death.

Joint return filing rules. If you are the surviving spouse 

and a personal representative is handling the estate for 

the decedent, you should coordinate filing your return for 

the year of death with this personal representative. See 

Joint Return under Final Income Tax Return for Decedent—Form 1040 or 1040-SR, earlier.

Income in Respect of a Decedent

All income the decedent would have received had death 

not occurred that wasn't properly includible on the final return, discussed earlier, is income in respect of a decedent.

If the decedent is a specified terrorist victim (see 

Specified Terrorist Victim, earlier), income received after the date of death and before the end 

of the decedent's tax year (determined without regard to 

death) is excluded from the recipient's gross income. This 

exclusion doesn't apply to certain income. For more information, see Pub. 3920.

How To Report

Income in respect of a decedent must be included in the 

income of one of the following.

• The decedent's estate, if the estate receives it.

• The beneficiary, if the right to income is passed directly to the beneficiary and the beneficiary receives it.

• Any person to whom the estate properly distributes 

the right to receive it.

If you have to include income in respect of a decedent in your gross income and an estate tax return 

(Form 706) was filed for the decedent, you may be 

able to claim a deduction for the estate tax paid on that income. See Estate Tax Deduction, later.

Example 1. F. Johnson owned and operated an apple 

orchard and used the cash method of accounting. F. Johnson sold and delivered 1,000 bushels of apples to a canning factory for $2,000, but didn't receive payment before 

death. The proceeds from the sale are income in respect 

of a decedent. When the estate was settled, payment had 

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Publication 559 (2023) 13
not been made and the estate transferred the right to the 

payment to F. Johnson’s surviving spouse. When the surviving spouse collects the $2,000, that amount must be included in the surviving spouse’s return. It isn't reported on 

the final return of the decedent or on the return of the estate.

Example 2. Assume the same facts as in Example 1, 

except that F. Johnson used the accrual method of accounting. The amount accrued from the sale of the apples 

would be included on F. Johnson’s final return. Neither the 

estate nor the surviving spouse would realize income in 

respect of a decedent when the money is later paid.

Example 3. On February 1, G. High, a cash method 

taxpayer, sold a tractor for $3,000, payable March 1 of the 

same year. G. High’s adjusted basis in the tractor was 

$2,000. G. High died on February 15, before receiving 

payment. The gain to be reported as income in respect of 

a decedent is the $1,000 difference between the decedent's basis in the property and the sale proceeds. In 

other words, the income in respect of a decedent is the 

gain the decedent would have realized had the decedent 

lived.

Example 4. C. O'Neil was entitled to a large salary 

payment at the date of death. The amount was to be paid 

in five annual installments. The estate, after collecting two 

installments, distributed the right to the remaining installments to you, the beneficiary. The payments are income in 

respect of a decedent. None of the payments were includible on C. O’Neil's final return. The estate must include in 

its income the two installments it received, and you must 

include in your income each of the three installments as 

you receive them.

Example 5. Danny inherited the right to receive renewal commissions on life insurance sold by Danny’s parent, Taylor, before Taylor’s death. Danny inherited the 

right from Danny’s other parent, Charlie, who acquired it 

by bequest from Taylor. Charlie died before receiving all 

the commissions Charlie had the right to receive, so 

Danny received the rest. The commissions are income in 

respect of a decedent. None of these commissions were 

includible in Taylor’s final return. The commissions received by Charlie were included in Charlie’s income. The 

commissions Danny received aren't includible in Charlie’s 

income, even on Charlie’s final return. Danny must include 

them in Danny’s income.

Character of income. The character of the income you 

receive in respect of a decedent remains the same as it 

would have been to the decedent if the decedent were 

alive. If the income would have been a capital gain to the 

decedent, it will be a capital gain to you.

Transfer of right to income. If you transfer your right to 

income in respect of a decedent, you must include in your 

income the greater of:

• The amount you receive for the right, or

• The FMV of the right you transfer.

If you make a gift of such a right, you must include in 

your income the FMV of the right at the time of the gift.

If the right to income from an installment obligation is 

transferred, the amount you must include in income is reduced by the basis of the obligation. See Installment obligations, later.

Transfer defined. A transfer for this purpose includes 

a sale, exchange, or other disposition, the satisfaction of 

an installment obligation at other than face value, or the 

cancellation of an installment obligation.

Installment obligations. If the decedent sold property 

using the installment method and you are collecting payments on an installment obligation acquired from the decedent, use the same gross profit percentage the decedent used to figure the part of each payment that 

represents profit. Include in your income the same profit 

the decedent would have included had death not occurred. For more information, see Pub. 537, Installment 

Sales.

If you dispose of an installment obligation acquired 

from a decedent (other than by transfer to the obligor), the 

rules explained in Pub. 537 for figuring gain or loss on the 

disposition apply to you.

Transfer to obligor. A transfer of a right to income, 

discussed earlier, has occurred if the decedent (seller) 

sold property using the installment method and the installment obligation was transferred to the obligor (buyer or 

person legally obligated to pay the installments). A transfer also occurs if the obligation was canceled either at 

death or by the estate or person receiving the obligation 

from the decedent. An obligation that becomes unenforceable is treated as having been canceled.

If such a transfer occurs, the amount included in the income of the transferor (the estate or beneficiary) is the 

greater of the amount received or the FMV of the installment obligation at the time of transfer, reduced by the basis of the obligation. The basis of the obligation is the decedent's basis, adjusted for all installment payments 

received after the decedent's death and before the transfer.

If the decedent and obligor were related persons, the 

FMV of the obligation can't be less than its face value.

Specific Types of Income in Respect of a 

Decedent

This section explains and provides examples of some 

specific types of income in respect of a decedent.

Wages. The entire amount of wages or other employee 

compensation earned by the decedent but unpaid at the 

time of death is income in respect of a decedent. The income isn't reduced by any amounts withheld by the employer. If the income is $600 or more, the employer should 

report it in box 3 of Form 1099-MISC, Miscellaneous Income, and give the recipient a copy of the form or a similar 

statement.

Wages paid as income in respect of a decedent aren't 

subject to federal income tax withholding. However, if paid 

14 Publication 559 (2023)
during the calendar year of death, they are subject to withholding for social security and Medicare taxes. These 

taxes should be included on the decedent's Form W-2 

along with the taxes withheld before death. These wages 

aren't included in box 1 of Form W-2.

Wages paid as income in respect of a decedent after 

the year of death aren’t generally subject to withholding for 

any federal taxes.

Farm income from crops, crop shares, and livestock. 

A farmer's growing crops and livestock at the date of 

death wouldn’t normally give rise to income in respect of a 

decedent or income to be included in the final return. 

However, when a cash method farmer receives rent in the 

form of crop shares or livestock and owns the crop shares 

or livestock at the time of death, the rent is income in respect of a decedent and is reported in the year in which 

the crop shares or livestock are sold or otherwise disposed 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 before death.

If the individual died during a rental period, only the net 

proceeds from the part of the rental period ending on the 

date of death are income in respect of a decedent. The 

proceeds from the rental period from the day after death to 

the end of the rental period are ordinary income to the estate. Cash rent or crop shares and livestock received as 

rent and reduced to cash by the decedent are includible 

on the final return even though the rental period didn't end 

until after death.

Example. A. Roberts, who used the cash method of 

accounting, leased part of the farm for a 1-year period beginning March 1. The rental was one-third of the crop, payable in cash when the crop share is sold at the direction of 

A. Roberts. A. Roberts died on June 30 and was alive during 122 days of the rental period. Seven months later, A. 

Roberts' personal representative ordered the crop to be 

sold and was paid $1,500. Of the $1,500, 122/365, or 

$501, is income in respect of a decedent. The balance of 

the $1,500 received by the estate, $999, is income to the 

estate.

Partnership income. If the decedent had been receiving 

payments representing a distributive share or guaranteed 

payment in liquidation of the decedent’s interest in a partnership, the remaining payments made to the estate or 

other successor in interest are income in respect of a decedent. The estate or the successor receiving the payments must include them in income when received. Similarly, the estate or other successor in interest receives 

income in respect of a decedent if amounts are paid by a 

third person in exchange for the successor's right to the 

future payments.

For a discussion of partnership rules, see Pub. 541, 

Partnerships.

U.S. savings bonds acquired from decedent. If series 

EE or series I U.S. savings bonds, owned by a cash 

method taxpayer who reported the interest each year, or 

by an accrual method taxpayer, are transferred because of 

death, the increase in value of the bonds (interest earned) 

in the year of death up to the date of death must be reported on the decedent's final return. The transferee (estate 

or beneficiary) reports on its return only the interest 

earned after the date of death.

The redemption values of U.S. savings bonds are generally available from local banks, credit unions, savings 

and loan institutions, or your nearest Federal Reserve 

Bank.

You can also get information by writing to the following 

address.

Series EE and Series I

Treasury Retail Securities Services

P.O. Box 9150

Minneapolis, MN 55480-9150

Or go to TreasuryDirect.gov.

If the bonds transferred because of death were owned 

by a cash method taxpayer who chose not to report the interest each year and had purchased the bonds entirely 

with personal funds, interest earned before death must be 

reported in one of the following ways.

1. The person (executor, administrator, etc.) who is required to file the decedent's final income tax return 

can elect to include all of the interest earned on the 

bonds before the decedent's death on the return. The 

transferee (estate or beneficiary) then includes only 

the interest earned after the date of death on its return.

2. If the election in (1) above wasn't made, the interest 

earned to the date of death is income in respect of the 

decedent and isn't included on the decedent's final return. In this case, all of the interest earned before and 

after the decedent's death is income to the transferee 

(estate or beneficiary). A transferee who uses the 

cash method of accounting and who has chosen not 

to report the interest annually may defer reporting any 

of it as income until the bonds are either cashed or 

reach the date of maturity, whichever is earlier. In the 

year the interest is reported, the transferee may claim 

a deduction for any federal estate tax paid that arose 

because of the part of interest (if any) included in the 

decedent's estate.

Example 1. Your relative, Drew, a cash method taxpayer, died and left you a $1,000 series EE bond. Drew 

bought the bond for $500 and had not chosen to report 

the increase in value each year. At the date of death, interest of $94 had accrued on the bond, and its value of $594 

at date of death was included in Drew's estate. Drew's 

personal representative didn't choose to include the $94 

accrued interest on the decedent's final income tax return. 

You are a cash method taxpayer and don't choose to report the increase in value each year as it is earned. Assuming you cash it when it reaches maturity value of 

$1,000, you would report $500 interest income (the difference between maturity value of $1,000 and the original 

cost of $500) in that year. You are also entitled to claim, in 

Publication 559 (2023) 15
that year, a deduction for any federal estate tax resulting 

from the inclusion in Drew’s estate of the $94 increase in 

value.

Example 2. If, in Example 1, the personal representative had chosen to include the $94 interest earned on the 

bond before death in the final income tax return for Drew, 

you would report $406 ($500 − $94) as interest when you 

cashed the bond at maturity. This $406 represents the interest earned after Drew's death and wasn't included in 

Drew’s estate, so no deduction for federal estate tax is allowable for this amount.

Example 3. Drew died owning series HH bonds Drew 

acquired in exchange for series EE bonds. You were the 

beneficiary of these bonds. Drew used the cash method of 

accounting and had not chosen to report the increase in 

redemption price of the series EE bonds each year as it 

accrued. Drew's personal representative made no election 

to include any interest earned before death on the decedent's final return. Your income in respect of the decedent 

is the sum of the unreported increase in value of the series 

EE bonds, which constituted part of the amount paid for 

the series HH bonds, and the interest, if any, payable on 

the series HH bonds but not received as of the date of the 

decedent's death.

Specific dollar amount legacy satisfied by transfer 

of bonds. If a beneficiary receives series EE or series I 

bonds from an estate in satisfaction of a specific dollar 

amount legacy and the decedent was a cash method taxpayer who didn't elect to report interest each year, only the 

interest earned after receipt of the bonds is income to the 

beneficiary. The interest earned to the date of death plus 

any further interest earned to the date of distribution is income to (and reportable by) the estate.

Cashing U.S. savings bonds. When you cash a U.S. 

savings bond that you acquired from a decedent, the bank 

or other payer that redeems it must give you a Form 

1099-INT if the interest part of the payment you receive is 

$10 or more. Your Form 1099-INT should show the difference between the amount received and the cost of the 

bond. The interest shown on your Form 1099-INT won't be 

reduced by any interest reported by the decedent before 

death, or, if elected, by the personal representative on the 

final income tax return of the decedent, or by the estate on 

the estate's income tax return. Your Form 1099-INT may 

show more interest than you must include in your income.

You must make an adjustment on your tax return to report the correct amount of interest. Report the total interest shown on Form 1099-INT on your Schedule B (Form 

1040). Enter a subtotal of the interest shown on Forms 

1099, and the interest reportable from other sources for 

which you didn't receive Forms 1099. Show the total interest that was previously reported and subtract it from the 

subtotal. Identify this adjustment as “U.S. Savings Bond 

Interest Previously Reported.”

Interest accrued on U.S. Treasury bonds. The interest 

accrued on U.S. Treasury bonds owned by a cash method 

taxpayer and redeemable for the payment of federal estate taxes that wasn't received as of the date of the individual's death is income in respect of a decedent. This interest isn't included in the decedent's final income tax return. 

The estate will treat such interest as taxable income in the 

tax year received if it chooses to redeem the U.S. Treasury 

bonds to pay federal estate taxes. If the person entitled to 

the bonds (by bequest, devise, or inheritance, or because 

of the death of the individual) receives them, that person 

will treat the accrued interest as taxable income in the 

year the interest is received. Interest that accrues on the 

U.S. Treasury bonds after the owner's death doesn't represent income in respect of a decedent. The interest, however, is taxable income and must be included in the income of the respective recipients.

Interest accrued on savings certificates. The interest 

accrued on savings certificates (redeemable after death 

without forfeiture of interest) for the period from the date of 

the last interest payment and ending with the date of the 

decedent's death, but not received as of that date, is income in respect of a decedent. Interest accrued after the 

decedent's death that becomes payable on the certificates after death isn't income in respect of a decedent, 

but is taxable income includible in the income of the respective recipients.

Inherited individual retirement arrangements (IRAs). 

If a beneficiary receives a lump-sum distribution from a 

traditional IRA the beneficiary inherited, all or some of it 

may be taxable. The distribution is taxable in the year received as income in respect of a decedent up to the decedent's taxable balance. This is the decedent's balance at 

the time of death, including unrealized appreciation and 

income accrued to date of death, minus any basis (nondeductible contributions). Amounts distributed that are more 

than the decedent's entire IRA balance (includes taxable 

and nontaxable amounts) at the time of death are the income of the beneficiary.

If the beneficiary of a traditional IRA is the decedent's 

surviving spouse who properly rolls over the distribution 

into another traditional IRA, the distribution isn't currently 

taxed. A surviving spouse can also roll over tax free the 

taxable part of the distribution into a qualified plan, section 

403 annuity, or section 457 plan.

For more information on inherited IRAs, see Pub. 

590-B, Distributions from Individual Retirement Arrangements (IRAs).

Roth IRAs. Qualified distributions from a Roth IRA aren't 

subject to tax. A distribution made to a beneficiary or to 

the Roth IRA owner's estate on or after the date of death 

is a qualified distribution if it is made after the 5-tax-year 

period beginning with the first tax year in which a contribution was made to any Roth IRA of the owner.

Generally, the entire interest in the Roth IRA must be 

distributed by the end of the fifth calendar year after the 

year of the owner's death unless the interest is payable to 

a designated beneficiary over the beneficiary’s life or life 

expectancy. If paid as an annuity, the distributions must 

begin before the end of the calendar year following the 

year of death. If the sole beneficiary is the decedent's 

spouse, the spouse can delay the distributions until the 

16 Publication 559 (2023)
decedent would have reached the applicable age or can 

treat the Roth IRA as the spouse’s own Roth IRA.

The part of any distribution made to a beneficiary that 

isn't a qualified distribution may be includible in the beneficiary's income. Generally, the part includible is the earnings in the Roth IRA. Earnings attributable to the period 

ending with the decedent's date of death are income in respect of a decedent. Additional earnings are the income of 

the beneficiary.

For more information on Roth IRAs, see Pub. 590-A, 

Contributions to Individual Retirement Arrangements 

(IRAs), and Pub. 590-B.

Coverdell ESA. Generally, the balance in a Coverdell 

ESA must be distributed within 30 days after the individual 

for whom the account was established reaches age 30 or 

dies, whichever is earlier. The treatment of the Coverdell 

ESA at the death of an individual under age 30 depends 

on who acquires the interest in the account. If the decedent's estate acquires the interest, see the discussion under Final Income Tax Return for Decedent—Form 1040 or 

1040-SR, earlier.

The age 30 limitation doesn't apply if the individual for whom the account was established or the 

beneficiary that acquires the account is an individual with special needs. This includes an individual who, 

because of a physical, mental, or emotional condition (including a learning disability), requires additional time to 

complete the individual’s education.

If the decedent's spouse or other family member is the 

designated beneficiary of the decedent's account, the 

Coverdell ESA becomes that person's Coverdell ESA. It is 

subject to the rules discussed in Pub. 970.

Any other beneficiary (including a spouse or family 

member who isn't the designated beneficiary) must include in income the earnings portion of the distribution. 

Any balance remaining at the close of the 30-day period is 

deemed to be distributed at that time. The amount included in income is reduced by any qualified education expenses of the decedent that are paid by the beneficiary 

within 1 year after the decedent's date of death. An estate 

tax deduction, discussed later, applies to the amount included in income by a beneficiary other than the decedent's spouse or family member.

HSA, Archer MSA, or Medicare Advantage MSA. The 

treatment of an HSA, an Archer MSA, or a Medicare Advantage MSA at the death of the account holder depends 

on who acquires the interest in the account. If the decedent's estate acquired the interest, see the discussion under Final Income Tax Return for Decedent—Form 1040 or 

1040-SR, earlier.

If the decedent's spouse is the designated beneficiary 

of the account, the account becomes that spouse's Archer 

MSA. It is subject to the rules discussed in Pub. 969.

Any other beneficiary (including a spouse that isn't the 

designated beneficiary) must include in income the FMV 

of the assets in the account on the decedent's date of 

death. This amount must be reported for the beneficiary's 

tax year that includes the decedent's date of death. The 

amount included in income is reduced by any qualified 

CAUTION

!

medical expenses for the decedent paid by the beneficiary 

within 1 year after the decedent's date of death. An estate 

tax deduction, discussed later, applies to the amount included in income by a beneficiary other than the decedent's spouse.

Deductions in Respect of a Decedent

Items such as business expenses, income-producing expenses, interest, and taxes, for which the decedent was liable but that aren't properly allowable as deductions on 

the decedent's final income tax return will be allowed as a 

deduction to one of the following when paid.

• The estate.

• The person who acquired an interest in the decedent's 

property (subject to such obligations) because of the 

decedent's death, if the estate wasn't liable for the obligation.

Note. Similar treatment is given to the foreign tax 

credit. A beneficiary who must pay a foreign tax on income 

in respect of a decedent will be entitled to claim the foreign tax credit.

Depletion. The deduction for percentage depletion is allowable only to the person (estate or beneficiary) who receives income in respect of a decedent to which the deduction relates, whether or not that person receives the 

property from which the income is derived. An heir who 

(because of the decedent's death) receives income as a 

result of the sale of units of mineral by the decedent (who 

used the cash method) will be entitled to the depletion allowance for that income. If the decedent had not figured 

the deduction on the basis of percentage depletion, any 

depletion deduction to which the decedent was entitled at 

the time of death is allowable on the decedent's final return, and no depletion deduction in respect of a decedent 

is allowed to anyone else.

For more information about depletion, see chapter 9 in 

Pub. 535, Business Expenses.

Estate Tax Deduction

Income that the decedent had a right to receive is included in the decedent's gross estate and is subject to estate 

tax. This income in respect of a decedent is also taxed 

when received by the recipient (estate or beneficiary). 

However, an income tax deduction is allowed to the recipient for the estate tax paid on the income.

The deduction for estate tax paid can only be claimed 

for the same tax year in which the income in respect of a 

decedent must be included in the recipient's income. (This 

is also true for income in respect of a prior decedent.)

Individuals can claim this deduction only as an itemized 

deduction on line 16 of Schedule A (Form 1040). Estates 

can claim the deduction on line 19 of Form 1041.

If income in respect of a decedent is capital gain income, you must reduce the gain, but not below zero, by 

Publication 559 (2023) 17
any deduction for estate tax paid on such gain. This applies in figuring the following.

• The maximum tax on net capital gain (including qualified dividends).

• The exclusion for gain on small business stock under 

section 1202.

• The limitation on capital losses.

Computation

To figure a recipient's estate tax deduction, determine:

• The estate tax that qualifies for the deduction, and

• The recipient's part of the deductible tax.

Deductible estate tax. The estate tax is the tax on the 

taxable estate, reduced by any credits allowed. The estate 

tax qualifying for the deduction is the part of the net value 

of all the items in the estate that represent income in respect of a decedent. Net value is the excess of the items 

of income in respect of a decedent over the items of expenses in respect of a decedent. The deductible estate 

tax is the difference between the actual estate tax and the 

estate tax determined without including net value.

Example 1. J. Sage used the cash method of accounting. At the time of death, J. Sage was entitled to receive 

$12,000 from clients for services provided and had accrued bond interest of $8,000, for total income in respect 

of a decedent of $20,000. J. Sage also owed $5,000 for 

business expenses for which the estate is liable. The income and expenses are reported on J. Sage's estate tax 

return.

The tax on J. Sage's estate is $9,460, after credits. The 

net value of the items included as income in respect of the 

decedent is $15,000 ($20,000 − $5,000). The estate tax 

determined without including the $15,000 in the taxable 

estate is $4,840, after credits. The estate tax that qualifies 

for the deduction is $4,620 ($9,460 − $4,840).

Recipient's deductible part. Figure the recipient's part 

of the deductible estate tax by dividing the estate tax 

value of the items of income in respect of a decedent included in the recipient's income (the numerator) by the total value of all items included in the estate that represent 

income in respect of a decedent (the denominator). If the 

amount included in the recipient's income is less than the 

estate tax value of the item, use the lesser amount in the 

numerator.

Example 2. As the beneficiary of J. Sage's estate (Example 1), you collect the $12,000 accounts receivable 

from J. Sage’s clients. You will include the $12,000 in your 

income in the tax year you receive it. If you itemize your 

deductions in that tax year, you can claim an estate tax 

deduction of $2,772 figured as follows:

Value included in your income

 X Estate tax qualifying for 

deduction Total value of income in respect 

of decedent

$12,000

X $4,620 = $2,772 $20,000

If the amount you collected for the accounts receivable 

was more than $12,000, you would still claim $2,772 as an 

estate tax deduction because only the $12,000 actually 

reported on the estate tax return can be used in the above 

computation. However, if you collected less than the 

$12,000 reported on the estate tax return, use the smaller 

amount to figure the estate tax deduction.

Estates. The estate tax deduction allowed to an estate is 

figured in the same manner discussed earlier. However, 

any income in respect of a decedent received by the estate during the tax year is reduced by any such income 

properly paid, credited, or required to be distributed by the 

estate to a beneficiary. The beneficiary would include 

such distributed income in respect of a decedent for figuring the beneficiary's estate tax deduction.

Surviving annuitants. For the estate tax deduction, an 

annuity received by a surviving annuitant under a joint and 

survivor annuity contract is considered income in respect 

of a decedent. The deceased annuitant must have died after the annuity starting date. You must make a special 

computation to figure the estate tax deduction for the surviving annuitant. See Regulations section 1.691(d)-1.

Gifts, Insurance, and Inheritances

Property received as a gift, bequest, or inheritance isn't included in your income. However, if property you receive in 

this manner later produces income, such as interest, dividends, or rents, that income is taxable to you. The income 

from property donated to a trust that is paid, credited, or 

distributed to you is taxable income to you. If the gift, bequest, or inheritance is the income from property, that income is taxable to you.

If you receive property from a decedent's estate in satisfaction of your right to the income of the estate, it is treated as a bequest or inheritance of income from property. 

See Distributions to Beneficiaries, later.

Insurance

The proceeds from a decedent's life insurance policy paid 

by reason of the decedent’s death are generally excluded 

from income. The exclusion applies to any beneficiary, 

whether a family member or other individual, a corporation, or a partnership.

Veterans' insurance proceeds. Veterans' insurance 

proceeds and dividends aren't taxable either to the veteran or to the beneficiaries.

Interest on dividends left on deposit with the Department of Veterans Affairs isn't taxable.

Life insurance proceeds. Life insurance proceeds paid 

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 

18 Publication 559 (2023)
policy was turned over to the recipient for a price. This is 

true even if the proceeds are paid under an accident or 

health insurance policy or an endowment contract. If the 

proceeds are received in installments, see the discussion 

under Insurance received in installments, later.

Accelerated death benefits. A beneficiary can exclude 

from income accelerated death benefits received on the 

life of an insured individual if certain requirements are met. 

Accelerated death benefits are amounts received under a 

life insurance contract before the death of the insured. 

These benefits also include amounts received on the sale 

or assignment of the contract to a viatical settlement provider. This exclusion applies only if the insured was a terminally ill individual or a chronically ill individual. This exclusion doesn't apply if the insured is a director, officer, or 

employee, or has a financial interest in any trade or business carried on by the beneficiary.

Terminally ill individual. A terminally ill individual is 

one who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death in 24 months or less from the date of 

certification.

Chronically ill individual. A chronically ill individual is 

one who has been certified as one of the following.

• An individual who, for at least 90 days, is unable to 

perform at least two activities of daily living without 

substantial assistance due to a loss of functional capacity.

• An individual who requires substantial supervision to 

be protected from threats to health and safety due to 

severe cognitive impairment.

A certification must have been made by a licensed 

health care practitioner within the previous 12 months.

Exclusion limited. If the insured was a chronically ill 

individual, exclusion of accelerated death benefits is limited to the cost incurred in providing qualified long-term 

care services for the insured. In determining the cost incurred, don't include amounts paid or reimbursed by insurance or otherwise. Subject to certain limits, exclude payments received on a periodic basis without regard to 

costs.

Interest option on insurance. If an insurance company 

pays interest only on proceeds from life insurance left on 

deposit, the interest is taxable.

Insurance received in installments. If a beneficiary receives life insurance proceeds in installments, the beneficiary can exclude part of each installment from income.

To determine the part excluded, divide the amount held 

by the insurance company (generally the total lump sum 

payable at the death of the insured person) by the number 

of installments to be paid. Include anything over this excluded part in income as interest.

Specified number of installments. If a beneficiary 

will receive a specified number of installments under the 

insurance contract, figure the part of each installment the 

beneficiary can exclude by dividing the amount held by 

the insurance company by the number of installments to 

which the beneficiary is entitled. In case the beneficiary 

dies before receiving all the installments, a secondary 

beneficiary is entitled to the same exclusion.

Example. As beneficiary, you choose to receive 

$100,000 of life insurance proceeds in 10 annual installments of $11,000. Each year, you can exclude from your 

income $10,000 ($100,000 ÷ 10) as a return of principal. 

The balance of the installment, $1,000, is taxable as interest income.

Specified amount payable. If each installment received under the insurance contract is a specific amount 

based on a guaranteed rate of interest, but the number of 

installments that will be received is uncertain, the part of 

each installment excluded from income is the amount held 

by the insurance company divided by the number of installments necessary to use up the principal and guaranteed interest in the contract.

Example. The face amount of the policy is $200,000, 

and as beneficiary you choose to receive annual installments of $12,000. The insurer's settlement option guarantees you this amount for 20 years based on a guaranteed 

rate of interest. It also provides that extra interest may be 

credited to the principal balance according to the insurer's 

earnings. The excludable part of each guaranteed installment is $10,000 ($200,000 ÷ 20 years). The balance of 

each guaranteed installment, $2,000, is interest income to 

you. The full amount of any additional payment for interest 

is income to you.

Installments for life. If the beneficiary under an insurance contract is entitled to receive the proceeds in installments for the rest of the beneficiary’s life without a refund 

or period-certain guarantee, the excluded part of each installment can be determined by dividing the amount held 

by the insurance company by the beneficiary’s life expectancy. If there is a refund or period-certain guarantee, the 

amount held by the insurance company for this purpose is 

reduced by the actuarial value of the guarantee.

Example. As beneficiary, you choose to receive the 

$50,000 proceeds from a life insurance contract under a 

life-income-with-cash-refund option. You are guaranteed 

$2,700 a year for the rest of your life (which is estimated 

by use of mortality tables to be 25 years from the insured's 

death). The actuarial value of the refund feature is $9,000. 

The amount held by the insurance company, reduced by 

the value of the guarantee, is $41,000 ($50,000 − $9,000) 

and the excludable part of each installment representing a 

return of principal is $1,640 ($41,000 ÷ 25). The remaining 

$1,060 ($2,700 − $1,640) is interest income to you. If you 

should die before receiving the entire $50,000, the refund 

payable to the refund beneficiary isn't taxable.

Flexible premium contracts. A life insurance contract 

(including any qualified additional benefits) qualifies as a 

flexible premium life insurance contract if it provides for 

the payment of one or more premiums that aren't fixed by 

the insurer as to both timing and amount. For a flexible 

premium contract issued before January 1, 1985, the 

Publication 559 (2023) 19
proceeds paid under the contract because of the death of 

the insured will be excluded from the recipient's income 

only if the contract meets the requirements explained under section 101(f).

Basis of Inherited Property

The basis of property inherited from a decedent is generally one of the following.

• The FMV of the property on the date of the individual's 

death.

• The FMV on the alternate valuation date (discussed in 

the Instructions for Form 706) if elected by the personal representative.

• The value under the special-use valuation method for 

real property used in farming or other closely held 

business (see Special-use valuation, later), if elected 

by the personal representative.

• The decedent's adjusted basis in land to the extent of 

the value excluded from the decedent's taxable estate 

as a qualified conservation easement (discussed in 

the Instructions for Form 706).

Exception for appreciated property. If you or your 

spouse gave appreciated property to an individual during 

the 1-year period ending on the date of that individual's 

death and you (or your spouse) later acquired the same 

property from the decedent, your basis in the property is 

the same as the decedent's adjusted basis immediately 

before death.

Appreciated property. Appreciated property is property that had an FMV greater than its adjusted basis on 

the day it was transferred to the decedent.

Special-use valuation. If you are a qualified heir and you 

receive a farm or other closely held business real property 

from the estate for which the personal representative elected special-use valuation, the property is valued on the 

basis of its actual use rather than its FMV.

If you are a qualified heir and you buy special-use valuation property from the estate, your basis is equal to the 

estate's basis (determined under the special-use valuation 

method) immediately before your purchase plus any gain 

recognized by the estate.

You are a qualified heir if you are an ancestor (parent, 

grandparent, etc.), the spouse, or a lineal descendant 

(child, grandchild, etc.) of the decedent, a lineal descendant of the decedent's parent or spouse, or the spouse of 

any of these lineal descendants.

For more information on special-use valuation, see the 

Instructions for Form 706.

Increased basis for special-use valuation property. 

Under certain conditions, some or all of the estate tax 

benefits obtained by using the special-use valuation will 

be subject to recapture. Generally, an additional estate tax 

must be paid by the qualified heir if the property is disposed of, or is no longer used for a qualifying purpose 

within 10 years of the decedent's death.

If you must pay any additional estate (recapture) tax, 

you can elect to increase your basis in the special-use valuation property to its FMV on the date of the decedent's 

death (or on the alternate valuation date, if it was elected 

by the personal representative). If you elect to increase 

your basis, you must pay interest on the recapture tax for 

the period beginning 9 months after the decedent's death 

until the date you pay the recapture tax.

For more information on the recapture tax, see the Instructions for Form 706-A, United States Additional Estate 

Tax Return.

S corporation stock. The basis of inherited S corporation stock must be reduced if there is income in respect of 

a decedent attributable to that stock.

Joint interest. Figure the surviving tenant's new basis of 

jointly owned property (joint tenancy or tenancy by the entirety) by adding the surviving tenant's original basis in the 

property to the value of the part of the property included in 

the decedent's estate, discussed earlier. Subtract from the 

sum any deductions for wear and tear, such as depreciation or depletion, allowed to the surviving tenant on that 

property.

Example. F. Maple and sibling A. Maple owned, as 

joint tenants with right of survivorship, rental property they 

purchased for $60,000. A. Maple paid $15,000 of the purchase price and F. Maple paid $45,000. Under local law, 

each had a half interest in the income from the property. 

When F. Maple died, the FMV of the property was 

$100,000. Depreciation deductions allowed before F. Maple's death were $20,000. A. Maple's basis in the property 

is $80,000 figured as follows:

A. Maple's original basis ............ $15,000

Interest acquired from F. Maple 

(

3/4 of $100,000) ................. 75,000 $90,000

Minus: 1/2 of $20,000 depreciation .............. 10,000

A. Maple's basis ........................ $80,000

Qualified joint interest. One-half of the value of property owned by a decedent and spouse as tenants by the 

entirety, or as joint tenants with right of survivorship if the 

decedent and spouse are the only joint tenants, is included in the decedent's gross estate. This is true regardless 

of how much each contributed toward the purchase price.

Figure the basis for a surviving spouse by adding 

one-half of the property's cost basis to the value included 

in the gross estate. Subtract from this sum any deductions 

for wear and tear, such as depreciation or depletion, allowed on that property to the surviving spouse.

Example. D. Gilbert and J. Gilbert owned, as tenants 

by the entirety, rental property they purchased for $60,000. 

D. Gilbert paid $15,000 of the purchase price and J. Gilbert paid $45,000. Under local law, each had a half interest in the income from the property. When J. Gilbert died, 

the FMV of the property was $100,000. Depreciation deductions allowed before J. Gilbert's death were $20,000. 

D. Gilbert's basis in the property is $70,000 figured as follows:

20 Publication 559 (2023)
One-half of cost basis (1/2 of $60,000) ... $30,000

Interest acquired from J. Gilbert 

(

1/2 of $100,000) ................. 50,000 $80,000

Minus: 1/2 of $20,000 depreciation .............. 10,000

D. Gilbert's basis........................ $70,000

See Pub. 551, Basis of Assets, for more information on 

basis. If the decedent and their spouse lived in a community property state, see the discussion in that publication 

about figuring the basis of community property after a 

spouse's death.

Depreciation. If a beneficiary can depreciate inherited 

property, the Modified Accelerated Cost Recovery System 

(MACRS) must be used to determine depreciation.

For joint interests and qualified joint interests, use the 

following computations to figure depreciation.

• The first computation is for the original basis in the 

property.

• The second computation is for the inherited part of the 

property.

Continue depreciating the original basis under the same 

method used in previous years. Depreciate the inherited 

part using MACRS.

MACRS consists of two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). For more information on 

MACRS, see Pub. 946, How To Depreciate Property.

Valuation misstatements. If the value or adjusted basis 

of any property claimed on an income tax return is 150% 

or more of the amount determined to be the correct 

amount, there is a substantial valuation misstatement. If 

the value or adjusted basis is 200% or more of the amount 

determined to be the correct amount, there is a gross valuation misstatement.

Understatements. A substantial estate or gift tax valuation misstatement occurs when the value of property reported is 65% or less of the actual value of the property. A 

gross valuation misstatement occurs if any property on a 

return is valued at 40% or less of the value determined to 

be correct.

Penalty. If a misstatement results in an underpayment 

of tax of more than $5,000, an addition to tax of 20% of 

the underpayment can apply. The penalty increases to 

40% if the value or adjusted basis reported is a gross valuation misstatement.

The IRS may waive all or part of the 20% addition to tax 

(for substantial valuation overstatement) if the following 

apply.

• The claimed value of the property was based on a 

qualified appraisal made by a qualified appraiser.

• In addition to obtaining such appraisal, the taxpayer 

made a good faith investigation of the value of the 

contributed property.

No waiver is available for the 40% addition to tax (for 

gross valuation overstatement).

For transitional guidance on the definitions of “qualified 

appraisal” and “qualified appraiser,” see Notice 2006-96, 

2006-46 I.R.B. 902, available at IRS.gov/irb/2006-46_IRB/

ar13.html.

The definitions apply to appraisals prepared for the following.

• Donated property for which a deduction of more than 

$5,000 is claimed.

• Returns filed after August 17, 2006.

Holding period. If you sell or dispose of inherited property that is a capital asset, the gain or loss is considered 

long term, regardless of how long you held the property.

Property distributed in kind. Your basis in property 

distributed in kind by a decedent's estate is the same as 

the estate's basis immediately before the distribution plus 

any gain, or minus any loss, recognized by the estate. 

Property is distributed in kind if it satisfies your right to receive another property or amount, such as the income of 

the estate or a specific dollar amount. Property distributed 

in kind generally includes any noncash property you receive from the estate other than the following.

• A specific bequest (unless it must be distributed in 

more than three installments).

• Real property, the title to which passes directly to you 

under local law.

For information on an estate's recognized gain or loss on 

distributions in kind, see Income To Include under Income 

Tax Return of an Estate—Form 1041, later.

Other Items of Income

Some other items of income that a survivor or beneficiary 

may receive are discussed below. Lump-sum payments 

received by the surviving spouse or beneficiary of a deceased employee may represent the following.

• Accrued salary payments.

• Distributions from employee profit-sharing, pension, 

annuity, and stock bonus plans.

• Other items that should be treated separately for tax 

purposes.

The treatment of these lump-sum payments depends on 

what the payments represent.

Public safety officers. Special rules apply to certain 

amounts received due to the death of a public safety officer (a law enforcement officer, fire fighter, chaplain, or 

member of an ambulance crew or rescue squad).

The provisions for public safety officers apply to a 

chaplain killed in the line of duty after September 

10, 2001, if the chaplain was responding to a fire, 

rescue, or police emergency as a member or employee of 

a fire or police department.

Death benefits. The death benefit payable to eligible 

survivors of public safety officers who die as a result of 

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Publication 559 (2023) 21
traumatic injuries sustained in the line of duty isn't included in either the beneficiaries' income or the decedent's 

gross estate. This benefit is administered through the Bureau of Justice Assistance (BJA).

The BJA can pay the eligible survivors an emergency 

interim benefit up to $3,000 if it determines that a public 

safety officer's death is one for which a death benefit will 

probably be paid. If there is no final payment, the recipient 

of the interim benefit is liable for repayment. However, the 

BJA may waive all or part of the repayment if it will cause a 

hardship. Any repayment waived isn't included in income.

Survivor benefits. Generally, a survivor annuity received by the spouse, former spouse, or child of a public 

safety officer killed in the line of duty is excluded from the 

recipient's income. The annuity must be provided under a 

government plan and is excludable to the extent that it is 

attributable to the officer's service as a public safety officer.

The exclusion doesn't apply if the recipient's actions 

were responsible for the officer's death. It also doesn't apply in the following circumstances.

• The death was caused by the intentional misconduct 

of the officer or by the officer's intention to cause such 

death.

• The officer was voluntarily intoxicated at the time of 

death.

• The officer was performing officer duties in a grossly 

negligent manner at the time of death.

Salary or wages. Salary or wages paid after the employee's death are usually taxable income to the beneficiary. 

See Wages, earlier, under Specific Types of Income in Respect of a Decedent.

If the decedent is a specified terrorist victim (see 

Specified Terrorist Victim, earlier), certain income 

received by the beneficiary or the estate isn't taxable. For more information, see Pub. 3920.

Rollover distributions. An employee's surviving spouse 

who receives an eligible rollover distribution may roll it 

over tax free into an IRA, a qualified plan, a section 403 

annuity, or a section 457 plan. For more information, see 

Pub. 575, Pension and Annuity Income; and Form 4972, 

Tax on Lump-Sum Distributions.

Rollovers by nonspouse beneficiary. A beneficiary 

other than the employee's surviving spouse may be able 

to roll over all or part of a distribution from an eligible retirement plan of a deceased employee. The nonspouse 

beneficiary must be the designated beneficiary of the employee. The distribution must be a direct trustee-to-trustee 

transfer to the beneficiary’s IRA set up to receive the distribution. The transfer will be treated as an eligible rollover 

distribution and the receiving plan will be treated as an inherited IRA. For more information on inherited IRAs, see 

Pubs. 590-A and 590-B.

Pensions and annuities. For beneficiaries who receive 

pensions and annuities, see Pub. 575. For beneficiaries of 

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federal civil service employees or retirees, see Pub. 721, 

Tax Guide to U.S. Civil Service Retirement Benefits.

Inherited IRAs. If a person other than the decedent's 

spouse inherits the decedent's traditional IRA or Roth IRA, 

that person can't treat the IRA as one established on the 

person’s behalf. If a distribution from a traditional IRA is 

from contributions that were deducted or from earnings 

and gains in the IRA, it is fully taxable income. If there 

were nondeductible contributions, an allocation between 

taxable and nontaxable income must be made. For information on distributions from a Roth IRA, see the discussion earlier under Income in Respect of a Decedent. The 

inherited IRA can't be rolled over into, or receive a rollover 

from, another IRA. No deduction is allowed for amounts 

paid into that inherited IRA. For more information about 

IRAs, see Pubs. 590-A and 590-B.

Estate income. Estates may have to pay federal income 

tax. Beneficiaries may have to pay tax on their share of estate income. However, there is never a double tax. See 

Distributions to Beneficiaries, later.

Income Tax Return of an 

Estate—Form 1041

An estate is a taxable entity separate from the decedent 

and comes into being with the death of the individual. It 

exists until the final distribution of its assets to the heirs 

and other beneficiaries. Income earned by the decedent 

up to and including the date of death is included on the 

decedent's final Form 1040 tax return. Income received after the date of death is included on the estate's Form 1041 

tax return. The tax is generally figured in the same manner 

and on the same basis as for individuals, with certain differences in the computation of deductions and credits, as 

explained later.

The estate's income, like an individual's income, must 

be reported annually on either a calendar or fiscal year basis. The personal representative chooses the estate's accounting period upon filing the first Form 1041. The estate's first tax year can be any period that ends on the last 

day of a month and doesn't exceed 12 months.

Generally, once chosen, the tax year can't be changed 

without IRS approval. Also, on the first income tax return, 

the personal representative must choose the accounting 

method (cash, accrual, or other) to report the estate's income. Once a method is used, it ordinarily can't be 

changed without IRS approval. For a more complete discussion of accounting periods and methods, see Pub. 

538.

Filing Requirements

Every domestic estate with gross income of $600 or more 

during a tax year must file a Form 1041. If one or more of 

the beneficiaries of the domestic estate are nonresident 

22 Publication 559 (2023)
aliens, the personal representative must file Form 1041, 

regardless of the estate’s gross income.

A fiduciary for a nonresident alien estate with 

U.S.-source income, including any income that is effectively connected with the conduct of a trade or business in 

the United States, must file Form 1040-NR as the income 

tax return of the estate. 

A nonresident alien who was a resident of Puerto Rico, 

Guam, American Samoa, or the Commonwealth of the 

Northern Mariana Islands for the entire tax year will, for 

this purpose, be treated as a resident alien of the United 

States.

To establish Excess Deductions for the beneficiaries, a 

return must be filed for the estate along with a schedule 

showing the computation of each kind of deduction and 

the allocation of each to the beneficiaries.

Schedule K-1 (Form 1041)

The personal representative must file a separate Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc., or an acceptable substitute (described below), for each beneficiary. File these schedules 

with Form 1041.

The personal representative must ask each beneficiary 

to provide a TIN, which must be reported on the Schedule K-1 (Form 1041). A $50 penalty is charged for each 

failure to provide the identifying number of each beneficiary unless reasonable cause is established. A nonresident alien beneficiary with a withholding certificate must 

generally provide a TIN (see Pub. 515). A TIN isn't required for an executor or administrator of the estate unless 

that person is also a beneficiary.

The personal representative must also give a Schedule K-1 (Form 1041), or a substitute, to each beneficiary 

by the date on which the Form 1041 is filed. Failure to provide this payee statement can result in a penalty of $310 

for each failure. This penalty also applies if information is 

omitted or incorrect information is included on the payee 

statement. If it is shown that such failure is due to intentional disregard of the filing requirement, the penalty 

amount increases.

No prior approval is needed for a substitute Schedule K-1 (Form 1041) that is an exact copy of the official 

schedule or that follows the specifications in Pub. 1167, 

General Rules and Specifications for Substitute Forms 

and Schedules. Prior approval is required for any other 

substitute Schedule K-1 (Form 1041).

Beneficiaries. The personal representative has a fiduciary responsibility to the ultimate recipients of the income 

and the property of the estate. While the courts use a 

number of names to designate specific types of beneficiaries or the recipients of various types of property, this publication refers to all of them as “beneficiaries.”

Liability of the beneficiary. The income tax liability of 

an estate attaches to the assets of the estate. If the 

income is distributed or must be distributed during the current tax year, the income is reportable by each beneficiary 

on the beneficiary’s individual income tax return. If the income doesn't have to be distributed, and isn't distributed 

but is retained by the estate, the income tax on the income 

is payable by the estate. If the income is distributed later 

without the payment of the taxes due, the beneficiary can 

be liable for tax due and unpaid to the extent of the value 

of the estate assets received.

Income of the estate is taxed to either the estate or the 

beneficiary, but not to both.

Nonresident alien beneficiary. In addition to filing 

Form 1041, the personal representative may need to file 

Form 1040-NR and pay the tax due, if any, if there is a 

nonresident alien beneficiary. There are a number of factors which determine whether a Form 1040-NR is required. For information on who must file Form 1040-NR, 

see Pub. 519, U.S. Tax Guide for Aliens.

If a nonresident alien has an appointed agent in the 

United States, the personal representative isn't responsible for filing Form 1040-NR and paying any tax due. However, a copy of the document appointing the agent must 

be attached to the estate's Form 1041.

The personal representative must also file Form 1042, 

Annual Withholding Tax Return for U.S. Source Income of 

Foreign Persons, and Form 1042-S, Foreign Person's U.S. 

Source Income Subject to Withholding, to report and 

transmit withheld tax on distributable net income (discussed later) actually distributed. This applies to the extent the distribution consists of an amount subject to withholding. For more information, see Pub. 515.

Amended Return

If an amended Form 1041 must be filed, use a copy of the 

form for the appropriate year and check the “Amended return” box. Complete the entire return, correct the appropriate lines with the new information, and refigure the tax liability. On an attached sheet, explain the reason for the 

changes and identify the lines and amounts changed.

Note. If the amended return results from an NOL loss 

carryback, check the "Net operating loss carryback" box. 

For more information, see the Instructions for Form 1041.

If the amended return results in a change to income, or 

a change in distribution of any income or other information 

provided to a beneficiary, an amended Schedule K-1 

(Form 1041) must be filed with Form 1041 and a copy 

given to each beneficiary. Check the “Amended K-1” box 

at the top of Schedule K-1 (Form 1041).

Information Returns

Even though the personal representative may not have to 

file an income tax return for the estate, Form 1099-DIV, 

Form 1099-INT, Form 1099-MISC, or Form 1099-NEC 

may need to be filed if the estate received income as a 

nominee or middleman for another person. For more information on filing information returns, see the General 

Instructions for Certain Information Returns.

Publication 559 (2023) 23
The personal representative will not have to file information returns for the estate if the estate is the owner of 

record, Form 1041 is filed for the estate (reporting the 

name, address, and identifying number of each actual 

owner), and a completed Schedule K-1 (Form 1041) is 

provided to each actual owner.

Penalty. A penalty of up to $310 can be charged for each 

failure to file or failure to include correct information on an 

information return. (Failure to include correct information 

includes failure to include all the information required.) If it 

is shown that such failure is due to intentional disregard of 

the filing requirement, the penalty amount increases.

See the General Instructions for Certain Information 

Returns for more information.

Copy of the Will

The personal representative does not have to include a 

copy of the decedent's will with Form 1041. If the will is 

later requested, attach a statement to it indicating the provisions that determine how much of the estate's income is 

taxable to the estate or to the beneficiaries. A statement 

signed by the personal representative under penalties of 

perjury that the will is a true and complete copy should 

also be attached.

Income To Include

The estate's taxable income is generally figured the same 

way as an individual's income, except as explained in the 

following discussions.

If the decedent is a specified terrorist victim (see 

Specified Terrorist Victim, earlier), certain income 

received by the estate isn't taxable. See Pub. 

3920.

Gross income of an estate consists of all items of income received or accrued during the tax year. It includes 

dividends, interest, rents, royalties, gain from the sale of 

property, and income from business, partnerships, trusts, 

and any other sources. For a discussion of income from 

dividends, interest, and other investment income, as well 

as gains and losses from the sale of investment property, 

see Pub. 550, Investment Income and Expenses. For a 

discussion of gains and losses from the sale of other property, including business property, see Pub. 544, Sales and 

Other Dispositions of Assets.

If the personal representative's duties include the operation of the decedent's business, see Pub. 334. That publication provides general information about the tax laws 

that apply to a sole proprietorship.

Income in respect of a decedent. The personal representative of the estate may receive income the decedent 

would have reported had death not occurred. For an explanation of this income, see Income in Respect of a Decedent under Other Tax Information, earlier. An estate 

may qualify to claim a deduction for estate taxes if the estate must include in gross income for any tax year an 

CAUTION

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amount of income in respect of a decedent. See Estate 

Tax Deduction under Other Tax Information, earlier.

Gain (or loss) from sale of property. During the administration of the estate, the personal representative may 

find it necessary or desirable to sell all or part of the estate's assets to pay debts and expenses of administration, 

or to make proper distributions of the assets to the beneficiaries. While the personal representative may have the 

legal authority to dispose of the property, title to it may be 

vested (given a legal interest in the property) in one or 

more of the beneficiaries. This is usually true of real property. To determine whether any gain or loss must be reported by the estate or by the beneficiaries, consult local law 

to determine the legal owner.

Redemption of stock to pay death taxes. Under 

certain conditions, a distribution to a shareholder (including the estate) in redemption of stock included in the decedent's gross estate may be allowed capital gain (or loss) 

treatment.

Character of asset. The character of an asset in the 

hands of an estate determines whether gain or loss on its 

sale or other disposition is capital or ordinary. The asset's 

character depends on how the estate holds or uses it. If it 

was a capital asset to the decedent, it will generally be a 

capital asset to the estate. If it was land or depreciable 

property used in the decedent's business and the estate 

continues the business, it will generally have the same 

character to the estate that it had in the decedent's hands. 

If it was held by the decedent for sale to customers, it will 

generally be considered to be held for sale to customers 

by the estate if the decedent's business continues to operate during the administration of the estate.

The gain from a sale of depreciable property between an estate and a beneficiary of that estate 

will be treated as ordinary income, unless the sale 

or exchange was made to satisfy a pecuniary (cash) bequest.

Sale of decedent's residence. If the estate is the legal owner of a decedent's residence and the personal representative sells it in the course of administration, the tax 

treatment of gain or loss depends on how the estate holds 

or uses the former residence. For example, if, as the personal representative, you intend to realize the value of the 

house through sale, the residence is a capital asset held 

for investment and gain or loss is capital gain or loss 

(which may be deductible). This is the case even though it 

was the decedent's personal residence and even if you 

didn't rent it out. If, however, the house isn't held for business or investment use (for example, if you intend to permit a beneficiary to live in the residence rent free and then 

distribute it to the beneficiary to live in), and you later decide to sell the residence without first converting it to business or investment use, any gain is capital gain, but a loss 

isn't deductible.

Holding period. An estate (or other recipient) that acquires property from a decedent and sells or otherwise 

disposes of it is considered to have held that property for 

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24 Publication 559 (2023)
more than 1 year, no matter how long the estate and the 

decedent actually held the property.

Basis of property. The basis used to figure gain or 

loss for property the estate receives from the decedent is 

usually its FMV at the date of death. See Basis of Inherited Property under Other Tax Information, earlier, for other 

basis in inherited property.

If the estate purchases property after the decedent's 

death, the basis will generally be its cost.

The basis of certain appreciated property the estate receives from the decedent will be the decedent's adjusted 

basis in the property immediately before death. This applies if the property was acquired by the decedent as a gift 

during the 1-year period before death, the property's FMV 

on the date of the gift was greater than the donor's adjusted basis, and the proceeds of the sale of the property are 

distributed to the donor (or the donor's spouse).

Schedule D (Form 1041) and Form 8949. Use Form 

8949, Sales and Other Dispositions of Capital Assets, to 

report most sales and exchanges of capital assets. Use 

Schedule D (Form 1041), Capital Gains and Losses, to report the overall capital gains and losses from transactions 

reported on Form 8949, certain transactions that don't 

have to be reported on Form 8949, and certain other capital gains and losses. For additional information, see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1041).

Installment obligations. If an installment obligation 

owned by the decedent is transferred by the estate to the 

obligor (buyer or person obligated to pay) or is canceled at 

death, include the income from that event in the gross income of the estate. See Installment obligations under Income in Respect of a Decedent, earlier. See Pub. 537 for 

information about installment sales.

Gain from sale of special-use valuation property. If 

the personal representative elected special-use valuation 

for farm or other closely held business real property and 

that property is sold to a qualified heir, the estate will recognize gain on the sale if the FMV on the date of the sale 

exceeds the FMV on the date of the decedent's death (or 

on the alternate valuation date if it was elected).

Qualified heirs. Qualified heirs include the decedent's 

ancestors (parents, grandparents, etc.) and spouse, the 

decedent's lineal descendants (children, grandchildren, 

etc.) and their spouses, and lineal descendants (and their 

spouses) of the decedent's parents or spouse.

For more information about special-use valuation, see 

Form 706 and its instructions.

Gain from transfer of property to a political organization. Appreciated property transferred to a political organization is treated as sold by the estate. Appreciated property is property that has an FMV (on the date of the 

transfer) greater than the estate's basis. The gain recognized is the difference between the estate's basis and the 

FMV on the date transferred.

A political organization is any party, committee, association, fund, or other organization formed and operated to 

accept contributions or make expenditures for influencing 

the nomination, election, or appointment of an individual 

to any federal, state, or local public office.

Gain or loss on distributions in kind. An estate recognizes gain or loss on a distribution of property in kind to a 

beneficiary only in the following situations.

1. The distribution satisfies the beneficiary's right to receive either of the following.

a. A specific dollar amount (whether payable in cash, 

in unspecified property, or in both).

b. A specific property other than the property distributed.

2. An election is made to recognize the gain or loss on 

the estate's income tax return (section 643(e)(3) election).

The gain or loss is usually the difference between the 

FMV of the property when distributed and the estate's basis in the property. However, see Gain from sale of special-use valuation property, earlier, for a limit on the gain 

recognized on a transfer of such property to a qualified 

heir.

If you elect to recognize gain or loss, the election applies to all noncash distributions during the tax year except 

charitable distributions and specific bequests. To make 

the election, report the transaction on Form 8949 and/or 

Schedule D (Form 1041), as applicable, and check the 

box on Form 1041, Other Information, line 7. The election 

must be made by the due date (including extensions) of 

the estate's income tax return for the year of distribution. 

However, if the return is timely filed without making the 

election, the election can be made by filing an amended 

return within 6 months of the due date of the return (excluding extensions). Attach Form 8949 and/or Schedule D 

(Form 1041), as applicable, to the amended return and 

enter “Filed pursuant to section 301.9100-2” on the form. 

File the amended return at the same address you filed the 

original return. IRS consent is required to revoke the election.

For more information, see Property distributed in kind 

under Income Distribution Deduction, later.

Under the related persons rules, a loss can't be 

claimed for property distributed to a beneficiary 

unless the distribution is in discharge of a pecuniary bequest. Also, any gain on the distribution of depreciable property is ordinary income.

Exemption and Deductions

In figuring taxable income, an estate is generally allowed 

the same deductions as an individual. Special rules, however, apply to some deductions for an estate. This section 

includes discussions of those deductions affected by the 

special rules.

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Publication 559 (2023) 25
Exemption Deduction

An estate is allowed an exemption deduction of $600 in 

figuring its taxable income. No exemption for dependents 

is allowed to an estate. Even though the first return of an 

estate may be for a period of less than 12 months, the exemption is $600. If, however, the estate was given permission to change its accounting period, the exemption is $50 

for each month of the short year.

Charitable Contributions

An estate qualifies for a deduction for gross income paid 

or permanently set aside for qualified charitable organizations. The AGI limits for individuals don't apply. However, 

to be deductible by an estate, the contribution must be 

specifically provided for in the decedent's will. If there is 

no will, or if the will makes no provision for the payment to 

a charitable organization, then a deduction won't be allowed even though all beneficiaries may agree to the gift.

You can't deduct any contribution unless it is attributable to the estate's gross income. Therefore, amounts distributed to a qualified charity from the estate's tax-exempt 

income or corpus (principal) do not qualify for the charitable contribution deduction. If the will specifically provides 

that the contributions are to be paid out of the estate's 

gross income, the contributions are fully deductible to the 

extent this provision in the will has economic effect independent of income tax consequences. However, if the provision lacks economic effect or the will provides that such 

contributions are paid out the of the estate's income, but 

contains no specific provisions regarding character (for 

example, gross income or tax-exempt income), then the 

contributions are considered to consist of the same proportion of each class of the items of income of the estate 

as the total of each class bears to the total of all classes.

You can't deduct a qualified conservation easement 

granted after the date of death and before the due date of 

the estate tax return. A contribution deduction is allowed 

to the estate for estate tax purposes.

For more information about contributions, see Pub. 

526, Charitable Contributions, and Pub. 561, Determining 

the Value of Donated Property.

Losses

Generally, an estate can claim a deduction for a loss it 

sustains on the sale of property. This includes a loss from 

the sale of property (other than stock) to a personal representative of the estate, unless that person is a beneficiary 

of the estate.

For a discussion of an estate's recognized loss on a 

distribution of property in kind to a beneficiary, see Income 

To Include, earlier.

An estate and a beneficiary of that estate are generally treated as related persons for purposes of 

the disallowance of a loss on the sale of an asset 

between related persons. The disallowance doesn't apply 

to a sale or exchange made to satisfy a pecuniary bequest.

Net operating loss deduction. An estate can claim a 

net operating loss (NOL) deduction, figured in the same 

way as an individual's, except that it can't take the income 

distribution deduction (discussed later) or the deduction 

for charitable contributions in figuring the loss or the loss 

carryover. For a discussion of the carryover of an unused 

NOL to a beneficiary upon termination of the estate, see 

Termination of Estate, later.

For information on NOLs, see Pub. 536.

Casualty and theft losses. Losses incurred from casualties and thefts during the administration of the estate 

can be deducted only if they haven't been claimed on the 

federal estate tax return (Form 706). The personal representative must file a statement with the estate's income 

tax return waiving the deduction for estate tax purposes. 

See Administration Expenses, later.

The same rules that apply to individuals apply to the estate, except that in figuring the AGI of the estate used to 

figure the deductible loss, you deduct any administration 

expenses claimed. Use Form 4684, Casualties and 

Thefts, and its instructions to figure any loss deduction.

Carryover losses. Carryover losses resulting from NOLs 

or capital losses sustained by the decedent before death 

can't be deducted on the estate's income tax return.

Administration Expenses

Expenses of administering an estate can be deducted either from the gross estate in figuring the federal estate tax 

on Form 706 or from the estate's gross income in figuring 

the estate's income tax on Form 1041. However, these expenses can't be claimed for both estate tax and income 

tax purposes. In most cases, this rule also applies to expenses incurred in the sale of property by an estate (not 

as a dealer).

To prevent a double deduction, amounts otherwise allowable in figuring the decedent's taxable estate for federal estate tax on Form 706 won't be allowed as a deduction in figuring the income tax of the estate or of any other 

person unless the personal representative files a statement, in duplicate, that the items of expense, as listed in 

the statement, haven't been claimed as deductions for 

federal estate tax purposes and that all rights to claim 

such deductions are waived. One deduction or part of a 

deduction can be claimed for income tax purposes if the 

appropriate statement is filed, while another deduction or 

part is claimed for estate tax purposes. Claiming a deduction in figuring the estate income tax isn't prevented when 

the same deduction is claimed on the estate tax return so 

long as the estate tax deduction isn't finally allowed and 

the preceding statement is filed. The statement can be 

filed with the income tax return or at any time before the 

CAUTION

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26 Publication 559 (2023)
expiration of the statute of limitations that applies to the 

tax year for which the deduction is sought. This waiver 

procedure also applies to casualty losses incurred during 

administration of the estate.

Accrued expenses. The rules preventing double deductions don't apply to deductions for taxes, interest, business expenses, and other items accrued at the date of 

death. These expenses are allowable as a deduction for 

estate tax purposes as claims against the estate and are 

also allowable as deductions in respect of a decedent for 

income tax purposes. Deductions for interest, business 

expenses, and other items not accrued at the date of the 

decedent's death are allowable only as a deduction for administration expenses for both estate and income tax purposes and don't qualify for a double deduction.

Expenses allocable to tax-exempt income. When figuring the estate's taxable income on Form 1041, you can't 

deduct administration expenses allocable to any of the estate's tax-exempt income. However, you can deduct these 

administration expenses when figuring the taxable estate 

for federal estate tax purposes on Form 706.

Interest on estate tax. Interest paid on installment payments of estate tax isn't deductible for income or estate 

tax purposes.

Depreciation and Depletion

The allowable deductions for depreciation and depletion 

that accrue after the decedent's death must be apportioned between the estate and the beneficiaries, depending on the income of the estate allocable to each.

An estate can't elect to treat the cost of certain 

depreciable business assets as an expense under section 179.

Example. In 2023, the decedent's estate realized 

$3,000 of business income during the administration of 

the estate. The personal representative distributed $1,000 

of the income to the decedent's child, Alex, and $2,000 to 

the second child, Jo. The allowable depreciation on the 

business property is $300. Alex can take a deduction of 

$100 [($1,000 ÷ $3,000) × $300], and Jo can take a deduction of $200 [($2,000 ÷ $3,000) × $300].

Income Distribution Deduction

An estate is allowed a deduction for the tax year for any income that must be distributed currently and for other 

amounts that are properly paid, credited, or required to be 

distributed to beneficiaries. This deduction is limited to the 

distributable net income of the estate.

For special rules about distributions that apply in figuring the estate's income distribution deduction, see Bequest under Distributions to Beneficiaries, later.

Distributable net income. Distributable net income (figured on Form 1041, Schedule B) is the estate's taxable inCAUTION

!

come, excluding the income distribution deduction, with 

the following additional modifications.

Tax-exempt interest. Tax-exempt interest, including 

exempt-interest dividends, is included in the distributable 

net income but is reduced by the following items.

• Expenses not allowed in computing the estate's taxable income because they were attributable to tax-exempt interest (see Expenses allocable to tax-exempt 

income under Administration Expenses, earlier).

• The portion of tax-exempt interest deemed to have 

been used to make a charitable contribution. See 

Charitable Contributions, earlier.

The total tax-exempt interest earned by an estate must 

be shown on Form 1041, Other Information, line 1. The 

beneficiary's portion of the tax-exempt interest is shown 

on Schedule K-1 (Form 1041).

Exemption deduction. The exemption deduction isn't 

allowed.

Capital gains. Capital gains aren't automatically included in distributable net income. However, they can be included in distributable net income if any of the following 

apply.

• 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.

• The gain is allocated to the corpus or principal of the 

estate and is actually distributed to the beneficiaries 

during the tax year.

• The gain is used, under either the terms of the will or 

the practice of the personal representative, to determine the amount that is distributed or must be distributed.

• Charitable contributions are made out of capital gains.

Generally, when you determine capital gains to be included in distributable net income, the exclusion for gain 

from the sale or exchange of qualified small business 

stock isn't taken into account.

Capital losses. Capital losses are excluded in figuring 

distributable net income unless they enter into the computation of any capital gain that is distributed or must be distributed during the year.

Separate shares rule. The separate shares rule must be 

used if both of the following are true.

• The estate has more than one beneficiary.

• The economic interest of a beneficiary doesn't affect 

and isn't affected by the economic interest of another 

beneficiary.

A bequest of a specific sum of money or of property isn't a 

separate share (see Bequest, later).

If the separate shares rule applies, the separate shares 

are treated as separate estates for the sole purpose of determining the distributable net income allocable to a share. 

Each share's distributable net income is based on that 

share's portion of gross income and any applicable 

Publication 559 (2023) 27
deductions or losses. The personal representative must 

use a reasonable and equitable method to make the allocations.

Generally, gross income is allocated among the separate shares based on the income each share is entitled to 

under the will or applicable local law. This includes gross 

income not received in cash, such as a distributive share 

of partnership tax items.

If a beneficiary isn't entitled to any of the estate's income, the distributable net income for that beneficiary is 

zero. The estate can't deduct any distribution made to that 

beneficiary and the beneficiary doesn't have to include the 

distribution in its gross income. However, see Income in 

Respect of a Decedent, later in this discussion.

Example. Pat's will directs you, the executor, to distribute ABC Corporation stock and all dividends from that 

stock to Pat’s child, Eli, and the residue of the estate to 

Pat’s second child, Morgan. The estate has two separate 

shares consisting of the dividends on the stock left to Eli 

and the residue of the estate left to Morgan. The distribution of the ABC Corporation stock qualifies as a bequest, 

so it isn't a separate share.

If any distributions, other than the ABC Corporation 

stock, are made during the year to either Eli or Morgan, 

you must determine the distributable net income for each 

separate share. The distributable net income for Eli's separate share includes only the dividends attributable to the 

ABC Corporation stock. The distributable net income for 

Morgan's separate share includes all other income.

Income in respect of a decedent. This income is allocated among the separate shares that could potentially 

be funded with these amounts, even if the share isn't entitled to receive any income under the will or applicable local law. This allocation is based on the relative value of 

each share that could potentially be funded with these 

amounts.

Example 1. Frankie's will directs you, the executor, to 

divide the residue of the estate (valued at $900,000) 

equally between Frankie’s two children, Jamie and Ash. 

Under the will, you must fund Jamie’s share first with the 

proceeds of Frankie's traditional IRA. The $90,000 balance in the IRA was distributed to the estate during the 

year. This amount is included in the estate's gross income 

as income in respect of a decedent and is allocated to the 

corpus of the estate. The estate has two separate shares, 

one for the benefit of Jamie and one for the benefit of Ash. 

If any distributions are made to either Jamie or Ash during 

the year, then, for purposes of determining the distributable net income for each separate share, the $90,000 of income in respect of a decedent must be allocated only to 

Jamie's share.

Example 2. Assume the same facts as in Example 1, 

except that you must fund Jamie's share first with DEF 

Corporation stock valued at $300,000, instead of the IRA 

proceeds. To determine the distributable net income for 

each separate share, the $90,000 of income in respect of 

a decedent must be allocated between the two shares to 

the extent they could potentially be funded with that 

income. The maximum amount of Jamie's share that could 

be funded with that income is $150,000 ($450,000 value 

of share less $300,000 funded with stock). The maximum 

amount of Ash's share that could be funded is $450,000. 

Based on the relative values, Jamie's distributable net income includes $22,500 ($150,000/$600,000 x $90,000) of 

the income in respect of a decedent and Ash's distributable net income includes $67,500 ($450,000/$600,000 x 

$90,000).

Income required to be distributed currently. The income distribution deduction includes any income that, under the terms of the decedent's will or by reason of local 

law, must be distributed currently. This includes an amount 

that may be paid out of income or corpus (such as an annuity) to the extent it is paid out of income for the tax year. 

The deduction is allowed to the estate even if the personal 

representative doesn't make the distribution until a later 

year or makes no distribution until the final settlement and 

termination of the estate.

Any other amount paid, credited, or required to be 

distributed. Any other amount paid, credited, or required 

to be distributed is included in the income distribution deduction of the estate only in the year actually paid, credited, or distributed. If there is no specific requirement by local law or by the terms of the will that income earned by 

the estate during administration be distributed currently, a 

deduction for distributions to the beneficiaries will be allowed to the estate, but only for the actual distributions 

during the tax year.

If the personal representative has discretion as to when 

the income is distributed, the deduction is allowed only in 

the year of distribution.

The personal representative can elect to treat distributions paid or credited within 65 days after the close of the 

estate's tax year as having been paid or credited on the 

last day of that tax year. The election is made by completing Form 1041, Other Information, line 6. If a tax return 

isn't required, the election is made on a statement filed 

with the IRS office where the return would have been filed. 

The election is irrevocable for the tax year and is only effective for the year of the election.

Interest in real estate. The value of an interest in real 

estate owned by a decedent, title to which passes directly 

to the beneficiaries under local law, isn't included as any 

other amount paid, credited, or required to be distributed.

Property distributed in kind. If an estate distributes 

property in kind, the estate's deduction is ordinarily the 

lesser of its basis in the property or the property's FMV 

when distributed. However, the deduction is the property's 

FMV if the estate recognizes gain on the distribution. See 

Gain or loss on distributions in kind under Income To Include, earlier.

Property is distributed in kind if it satisfies the beneficiary's right to receive another property or amount, such 

as the income of the estate or a specific dollar amount. It 

28 Publication 559 (2023)
generally includes any noncash distribution other than the 

following.

• A specific bequest (unless it must be distributed in 

more than three installments).

• Real property, the title to which passes directly to the 

beneficiary under local law.

Tax-exempt income not deductible. The estate can't 

take an income distribution deduction for any item of distributable net income not included in the estate's gross income.

Example. An estate has distributable net income of 

$2,000, consisting of $1,000 of dividends and $1,000 of 

tax-exempt interest. Distributions to the beneficiary total 

$1,500. Except for this rule, the income distribution deduction would be $1,500 ($750 of dividends and $750 of 

tax-exempt interest). However, as the result of this rule, 

the income distribution deduction is limited to $750, because no deduction is allowed for the tax-exempt interest 

distributed.

Denial of double deduction. A deduction can't be 

claimed twice. If an amount is considered to have been 

distributed to a beneficiary of an estate in a preceding tax 

year, it can't again be included in figuring the deduction for 

the year of the actual distribution.

Example. The decedent's will provides that the estate 

must distribute currently all of its income to a beneficiary. 

For administrative convenience, the personal representative didn't make a distribution of part of the income for the 

tax year until the first month of the next tax year. The 

amount must be deducted by the estate in the first tax 

year, and must be included in the income of the beneficiary in that year. This amount can't be deducted again by 

the estate in the following year when it is paid to the beneficiary, nor must the beneficiary again include the amount 

in income in that year.

Charitable contribution. Any amount allowed as a charitable deduction by the estate in figuring the estate's taxable income can't be claimed again as a deduction for a 

distribution to a beneficiary.

Funeral and Medical Expenses

No deduction can be taken for funeral expenses or medical and dental expenses on the estate's Form 1041.

Funeral expenses. Funeral expenses paid by the estate 

aren't deductible in figuring the estate's taxable income on 

Form 1041. They are deductible only for determining the 

taxable estate for federal estate tax purposes on Form 

706.

Medical and dental expenses of a decedent. The 

medical and dental expenses of a decedent paid by the 

estate aren't deductible in figuring the estate's taxable income on Form 1041. You can deduct them in figuring the 

taxable estate for federal estate tax purposes on Form 

706. If these expenses are paid within the 1-year period 

beginning with the day after the decedent's death, you can 

elect to deduct them on the decedent's income tax return 

(Form 1040 or 1040-SR) for the year in which they were 

incurred. See Medical Expenses under Final Income Tax 

Return for Decedent—Form 1040 or 1040-SR, earlier.

Credits, Tax, and Payments

This section includes brief discussions of some of the tax 

credits, types of taxes that may be owed, and estimated 

tax payments reported on the estate's Form 1041.

Credits

Estates are generally allowed some of the same tax credits that are allowed to individuals. The credits are generally allocated between the estate and the beneficiaries. 

However, estates aren't allowed the credit for the elderly or 

the disabled, the child tax credit, or the earned income 

credit discussed earlier under Final Income Tax Return for 

Decedent—Form 1040 or 1040-SR.

Foreign tax credit. The foreign tax credit is discussed in 

Pub. 514, Foreign Tax Credit for Individuals.

General business credit. The general business credit is 

available to an estate involved in a business. For more information, see Pub. 334.

Tax

You can't use the Tax Table for individuals to figure the estate tax. You must use the tax rate schedule in the Instructions for Form 1041 to figure the estate tax.

Alternative minimum tax (AMT). An estate may be liable for the AMT. To figure the AMT, use Schedule I (Form 

1041), Alternative Minimum Tax—Estates and Trusts. Certain credits may be limited by any tentative minimum tax 

figured on Schedule I (Form 1041), Part III, line 52, even if 

there is no AMT liability.

If the estate takes a deduction for distributions to beneficiaries, complete Parts I and II of Schedule I (Form 1041) 

even if the estate doesn't owe AMT. Allocate the income 

distribution deduction figured on a minimum tax basis 

among the beneficiaries and report each beneficiary's 

share on Schedule K-1 (Form 1041). Also, show each 

beneficiary's share of any adjustments or tax preference 

items for depreciation, depletion, and amortization.

For more information, see the Instructions for Schedule I (Form 1041).

Payments

The estate's income tax liability must be paid in full when 

the return is filed. You may have to pay estimated tax, 

however, as explained below.

Estimated tax. Estates with tax years ending 2 or more 

years after the date of the decedent's death must pay estimated tax in the same manner as individuals.

Publication 559 (2023) 29
If you must make estimated tax payments for 2024, use 

Form 1041-ES, Estimated Income Tax for Estates and 

Trusts, to determine the estimated tax to be paid.

Generally, you must pay estimated tax if the estate is 

expected to owe, after subtracting any withholding and 

credits, at least $1,000 in tax for 2024. You won't, however, 

have to pay estimated tax if you expect the withholding 

and credits to be at least:

1. 90% of the tax to be shown on the 2024 return, or

2. 100% of the tax shown on the 2023 return (assuming 

the return covered all 12 months).

The percentage in (2) above is 110% if the estate's 2023 

AGI was more than $150,000 (and less than 2/3 of gross 

income for 2023 and 2024 is from farming or fishing). To 

figure the estate's AGI, see the Instructions for Form 1041.

The general rule is that the first estimated tax payment 

must be made by the 15th day of the 4th month of the tax 

year (whether calendar or fiscal). The estimated tax may 

be paid in full at that time or paid in four equal installments 

on the 15th day of the 4th, 6th, and 9th months of the tax 

year, and the 1st month of the following tax year. If any of 

these dates fall on a Saturday, Sunday, or legal holiday, 

the payment must be made by the next business day. For 

2024, a calendar year taxpayer's estimated tax payments 

are due on April 15, 2024; June 15, 2024; September 15, 

2024; and January 15, 2025.

For exceptions to the general rule, see the Instructions 

for Form 1041-ES and Pub. 505, Tax Withholding and Estimated Tax.

A penalty may be charged for not paying enough estimated tax or for not making the payment on time in the required amount (even if there is an overpayment on the tax 

return). Use Form 2210, Underpayment of Estimated Tax 

by Individuals, Estates, and Trusts, to figure any penalty, 

or let the IRS figure the penalty.

For more information, see the Instructions for Form 

1041-ES and Pub. 505. Also, see Transfer of Credit for Estimated Tax Payments, later, for information regarding the 

transfer of the estate's estimated tax payments to the beneficiary(ies).

Name, Address, and Signature

In the top space of the name and address area of Form 

1041, enter the exact name of the estate used to apply for 

the estate's EIN. In the remaining spaces, enter the name 

and address of the personal representative of the estate.

Signature. The personal representative (or its authorized 

officer if the personal representative isn't an individual) 

must sign the return. An individual who prepares the return for pay must sign the return as preparer. You can 

check a box in the signature area that authorizes the IRS 

to contact that paid preparer for certain information. See 

the Instructions for Form 1041 for more information.

When and Where To File

When Form 1041 (or Form 1040-NR if it applies) is filed 

depends on whether the personal representative chooses 

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 business office.

When to file. If the calendar year is the estate's accounting period, the 2023 Form 1041 is due by April 15, 2024 

(June 15, 2024, in the case of Form 1040-NR for a nonresident alien estate that doesn't have an office in the United States). If the personal representative chooses a fiscal 

year, Form 1041 is due by the 15th day of the 4th month 

(6th month for a Form 1040-NR) after the end of the tax 

year. If the due date is a Saturday, Sunday, or legal holiday, the form must be filed by the next business day.

Extension of time to file. An automatic 51/2-month 

extension of time to file Form 1041 can be requested by 

filing Form 7004, Application for Automatic Extension of 

Time To File Certain Business Income Tax, Information, 

and Other Returns. The extension is automatic, so no signature or reason for the request is required. File Form 

7004 on or before the regular due date of Form 1041. 

Form 7004 can be electronically filed. For additional information, see the Instructions for Form 7004.

An extension of time to file a return doesn't extend the 

time for payment of tax due. The total income tax estimated to be due on Form 1041 must be paid in full by the regular due date of the return. For additional information, see 

the Instructions for Form 7004.

Where to file. The personal representative of an estate 

files the estate's income tax return (Form 1041) with the 

Internal Revenue Service Center assigned to the state 

where the personal representative lives or has their principal place of business. A list of the states and assigned 

Service Centers is in the Instructions for Form 1041.

Form 1040-NR must be filed at the following address:

Department of the Treasury

Internal Revenue Service

Kansas City, MO 64999 USA

If enclosing a payment, mail Form 1040-NR to:

Internal Revenue Service

P.O. Box 1303

Charlotte, NC 28201-1303 USA

Electronic filing. Form 1041 can be filed electronically. See the instructions for more information.

Private delivery services (PDSs). Filers can use certain PDSs designated by the IRS to meet the “timely mailing as timely filing” rule for tax returns. Go to IRS.gov/PDS 

for the current list of designated services.

The PDS can tell you how to get written proof of the 

mailing date.

For the IRS mailing address to use if you're using a 

PDS, go to IRS.gov/PDSStreetAddresses.

PDSs can’t deliver items to IRS P.O. boxes. You 

must use the U.S. Postal Service to mail any items 

CAUTION

to an IRS P.O. box address.

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30 Publication 559 (2023)
Distributions to Beneficiaries

If you are the beneficiary of an estate that is required to 

distribute all its income currently, you must report your 

share of the distributable net income, whether or not you 

have actually received the distribution.

If you are a beneficiary of an estate that isn't required to 

distribute all its income currently, you must report all income that is required to be distributed to you currently 

(whether or not actually distributed), plus all other 

amounts paid, credited, or required to be distributed to 

you, up to your share of distributable net income. As explained earlier under Income Distribution Deduction, for 

an amount to be income required to be distributed currently, there must be a specific requirement for current distribution either under local law or the terms of the decedent's will. If there is no such requirement, the income is 

reportable only when distributed.

If the estate has more than one beneficiary, the separate shares rule discussed earlier under Income Distribution Deduction may have to be used to determine the distributable net income allocable to each beneficiary. The 

beneficiaries in the examples shown next don't meet the 

requirements of the separate shares rule.

Income That Must Be Distributed 

Currently

Beneficiaries entitled to receive currently distributable income must generally include in gross income the entire 

amount due them. However, if the income required to be 

distributed currently is more than the estate's distributable 

net income figured without deducting charitable contributions, each beneficiary must include in gross income a ratable part of the distributable net income.

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, 

out of the estate's income during the period of administration. There are no charitable contributions. For the year, 

the estate's distributable net income is only $6,000. The 

distributable net income is less than the currently distributable income, so only $4,000 [($5,000 ÷ $7,500) × $6,000] 

must be reported in the surviving spouse’s gross income, 

and only $2,000 [($2,500 ÷ $7,500) × $6,000] must be reported in Cameron’s gross income.

Annuity payable out of income or corpus. Income that 

is required to be distributed currently includes any amount 

that must be paid out of income or corpus (principal of the 

estate) to the extent the amount is satisfied out of income 

for the tax year. An annuity that must be paid in all events 

(either out of income or corpus) would qualify as income 

that is required to be distributed currently to the extent 

there is income of the estate not paid, credited, or required to be distributed to other beneficiaries for the tax 

year.

Example 1. H. Frank's will provides that $500 be paid 

to the local Community Chest out of income each year. It 

also provides that $2,000 a year is currently distributable 

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, 

out of income or corpus. Capital gains are allocable to corpus, but all expenses are to be charged against income. 

Last year, the estate had income of $6,000 and expenses 

of $3,000. The personal representative paid $500 to the 

Community Chest and made the distributions to Charlie 

and Jessie as required by the will.

The estate's distributable net income (figured before 

the charitable contribution) is $3,000. The currently distributable income totals $2,500 ($2,000 to Charlie and $500 

to Jessie). The income available for Jessie’s annuity is 

only $500 because the will requires that the charitable 

contribution be paid out of current income. The $2,500 

treated as distributed currently is less than the $3,000 distributable net income (before the contribution), so $2,000 

must be included in Charlie’s gross income and $500 

must be included in Jessie’s gross income.

Example 2. Assume the same facts as in Example 1, 

except the estate has an additional $1,000 of administration 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 

additional expense). The amount treated as currently distributable income is still $2,500 ($2,000 to Charlie and 

$500 to Jessie). The $2,500 treated as distributed currently is more than the $2,000 distributable net income, so 

$1,600 [($2,000 ÷ $2,500) × $2,000] must be included in 

Charlie’s gross income and $400 [($500 ÷ $2,500) × 

$2,000] must be included in Jessie’s gross income. Charlie and Jessie are beneficiaries of amounts that must be 

distributed currently, so they don't benefit from the reduction of distributable net income by the charitable contribution deduction.

Other Amounts Distributed

Any other amount paid, credited, or required to be distributed to the beneficiary for the tax year must also be included in the beneficiary's gross income. Such an amount is 

in addition to those amounts that are required to be distributed currently, as discussed earlier. It doesn't include 

gifts or bequests of specific sums of money or specific 

property if such sums are paid in three or fewer installments. However, amounts that can be paid only out of income aren't excluded under this rule. If the sum of the income that must be distributed currently and other 

amounts paid, credited, or required to be distributed exceeds distributable net income, these other amounts are 

included in the beneficiary's gross income only to the extent distributable net income exceeds the income that 

must be distributed currently. If there is more than one 

beneficiary, each will include in gross income only a pro 

rata share of such amounts.

The personal representative can elect to treat distributions paid or credited by the estate within 65 days after the 

Publication 559 (2023) 31
close of the estate's tax year as having been paid or credited on the last day of that tax year.

The following are examples of other amounts distributed.

• Distributions made at the discretion of the personal 

representative.

• Distributions required by the terms of the will when a 

specific event occurs.

• Annuities that must be paid in any event, but only out 

of corpus (principal).

• Distributions of property in kind as defined earlier under Income Distribution Deduction, under Income Tax 

Return of an Estate—Form 1041.

• Distributions required for the support of the decedent's 

surviving spouse or other dependent for a limited period, but only out of corpus (principal).

If an estate distributes property in kind, the amount of 

the distribution is ordinarily the lesser of the estate's basis 

in the property or the property's FMV when distributed. 

However, the amount of the distribution is the property's 

FMV if the estate recognizes gain on the distribution. See 

Gain or loss on distributions in kind in the discussion Income To Include, earlier.

Example. The terms of M. Scott's will require the distribution of $2,500 of income annually to M. Scott’s spouse, 

Reese. If any income remains, it may be accumulated or 

distributed to M. Scott’s two children, Joe and Alex, in 

amounts at the discretion of the personal representative. 

The personal representative may also invade the corpus 

(principal) for the benefit of M. Scott's spouse and children.

Last year, the estate had income of $6,000 after deduction of all expenses. Its distributable net income is also 

$6,000. The personal representative distributed the required $2,500 of income to Reese. In addition, the personal representative distributed $1,500 each to Joe and 

Alex and an additional $2,000 to Reese.

Reese includes $2,500 of currently distributable income in gross income. The other amounts distributed totaled $5,000 ($1,500 + $1,500 + $2,000) and are includible in the incomes of Reese, Joe, and Alex to the extent of 

$3,500 (distributable net income of $6,000 minus currently 

distributable income to Reese of $2,500). Reese will include an additional $1,400 [($2,000 ÷ $5,000) × $3,500] in 

gross income. Joe and Alex each will include $1,050 

[($1,500 ÷ $5,000) × $3,500] in their gross incomes.

Discharge of a Legal Obligation

If an estate, under the terms of a will, discharges a legal 

obligation of a beneficiary, the discharge is included in that 

beneficiary's income as either currently distributable income or other amount paid. This doesn't apply to the discharge of a beneficiary's obligation to pay alimony or separate maintenance.

The beneficiary's legal obligations include a legal obligation of support, for example, of a minor child. Local law 

determines a legal obligation of support.

Character of Distributions

An amount distributed to a beneficiary for inclusion in 

gross income retains the same character for the beneficiary that it had for the estate.

No charitable contribution made. If no charitable contribution is made during the tax year, treat the distributions 

as consisting of the same proportion of each class of 

items entering into the computation of distributable net income as the total of each class bears to the total distributable net income. Distributable net income was defined 

earlier under Income Distribution Deduction, under Income Tax Return of an Estate—Form 1041. However, if 

the will or local law specifically provides or requires a different allocation, use that allocation.

Example 1. An estate has distributable net income of 

$3,000, consisting of $1,800 in rents and $1,200 in taxable interest. There is no provision in the will or local law for 

the allocation of income. The personal representative distributes $1,500 each to Harper and Drew, beneficiaries in 

their parent’s will. Each will be treated as having received 

$900 in rents and $600 of taxable interest.

Example 2. Assume in Example 1 that the will provides for the payment of the taxable interest to Harper and 

the rental income to Drew and that the personal representative distributed the income under those provisions. 

Harper is treated as having received $1,200 in taxable interest and Drew is treated as having received $1,800 of 

rental income.

Charitable contribution made. If a charitable contribution is made by an estate and the terms of the will or local 

law provide for the contribution to be paid from specified 

sources, that provision governs. If no provision or requirement exists, the charitable contribution deduction must be 

allocated among the classes of income entering into the 

computation of the income of the estate before allocation 

of other deductions among the items of distributable net 

income. In allocating items of income and deductions to 

beneficiaries to whom income must be distributed currently, the charitable contribution deduction isn't taken into 

account to the extent that it exceeds income for the year 

reduced by currently distributable income.

Example. The will of H. Thomas requires a current distribution from income of $3,000 a year to H. Thomas’s 

spouse, Kai, during the administration of the estate. The 

will also provides that the personal representative, using 

discretion, may distribute the balance of the current earnings either to H. Thomas's child, Avery, or to one or more 

designated charities. Last year, the estate's income consisted of $4,000 of taxable interest and $1,000 of tax-exempt interest. There were no deductible expenses. The 

personal representative distributed the $3,000 to Kai, 

32 Publication 559 (2023)
made a contribution of $2,500 to the local heart association, and paid $1,500 to Avery.

The distributable net income for determining the character of the distribution to Kai is $3,000. The charitable 

contribution deduction to be taken into account for this 

computation is $2,000 (the estate's income ($5,000) minus the currently distributable income ($3,000)). The 

$2,000 charitable contribution deduction must be allocated: $1,600 [($4,000 ÷ $5,000) × $2,000] to taxable interest and $400 [($1,000 ÷ $5,000) × $2,000] to tax-exempt 

interest. Kai is considered to have received $2,400 

($4,000 − $1,600) of taxable interest and $600 ($1,000 − 

$400) of tax-exempt interest. Kai must include the $2,400 

in gross income and must report the $600 of tax-exempt 

interest, but it isn't taxable.

To determine the amount to be included in Avery's 

gross income, however, take into account the entire charitable contribution deduction. The currently distributable income is greater than the estate's income after taking into 

account the charitable contribution deduction, so none of 

the amount paid to Avery must be included in Avery’s 

gross income for the year.

How and When To Report

How income from the estate is reported depends on the 

character of the income in the hands of the estate. When 

the income is reported depends on whether it represents 

amounts credited or required to be distributed to beneficiaries or other amounts.

How to report estate income. Each item of income 

keeps the same character in the hands of a beneficiary as 

it had in the hands of the estate. If the items of income distributed or considered to be distributed include dividends, 

tax-exempt interest, or capital gains, they will keep the 

same character in the beneficiary's hands for purposes of 

the tax treatment given those items. Generally, a beneficiary reports dividends on Form 1040 or 1040-SR, line 3b, 

and capital gains on Schedule D (Form 1040). The tax-exempt interest, while not included in taxable income, must 

be shown on Form 1040 or 1040-SR, line 2a. Report business and other nonpassive income in Part III of Schedule E (Form 1040), Supplemental Income and Loss.

The estate's personal representative must provide the 

beneficiary with the classification of the various items that 

make up the beneficiary’s share of the estate income and 

the credits the beneficiary takes into consideration to 

properly prepare the beneficiary’s individual income tax 

return. See Schedule K-1 (Form 1041), later.

When to report estate income. If income from the estate is credited or must be distributed to a beneficiary for a 

tax year, the beneficiary reports that income (even if not 

distributed) on the return for that year. The personal representative can elect to treat distributions paid or credited 

within 65 days after the close of the estate's tax year as 

having been paid or credited on the last day of that tax 

year. If this election is made, the beneficiary must report 

that distribution on the beneficiary’s return for that year.

Other income from the estate is reported on the beneficiary’s return for the year in which it was received. If the 

beneficiary's tax year is different from the estate's tax year, 

see Different tax years next.

Different tax years. Each beneficiary must include 

their share of the estate income in the beneficiary’s return 

for the tax year in which the last day of the estate's tax 

year falls. If the tax year of the estate is a fiscal year ending on June 30, 2023, and the beneficiary's tax year is the 

calendar year, the beneficiary will include in gross income 

for the tax year ending December 31, 2023, their share of 

the estate's distributable net income distributed or required to be distributed during the fiscal year ending the 

previous June 30.

Death of individual beneficiary. If an individual beneficiary dies, the beneficiary's share of the estate's distributable net income may be distributed or be considered 

distributed by the estate for its tax year that doesn't end 

with or within the last tax year of the beneficiary. In this 

case, the estate income that must be included in the gross 

income on the beneficiary's final return is based on the 

amounts distributed or considered distributed during the 

tax year of the estate in which the beneficiary’s last tax 

year ended. However, for a cash basis beneficiary, the 

gross income of the last tax year includes only the 

amounts actually distributed before death. Income that 

must be distributed to the beneficiary but, in fact, is distributed to the beneficiary's estate after death is included in 

the gross income of the beneficiary's estate as income in 

respect of a decedent.

Termination of nonindividual beneficiary. If a beneficiary that isn't an individual, for example, a trust or a corporation, ceases to exist, the amount included in its gross 

income for its last tax year is determined as if the beneficiary were a deceased individual. However, income that 

must be distributed before termination, but which is actually distributed to the beneficiary's successor in interest, 

is included in the gross income of the nonindividual beneficiary for its last tax year.

Schedule K-1 (Form 1041). The personal representative of the estate must provide the beneficiary with a copy 

of Schedule K-1 (Form 1041) or a substitute Schedule K-1. The beneficiary shouldn't file Schedule K-1 (Form 

1041) with the beneficiary’s Form 1040 or 1040-SR, but 

should keep it for their personal records.

Each beneficiary (or nominee of a beneficiary) who receives a distribution from the estate for the tax year or to 

whom any item is allocated must receive a Schedule K-1 

(Form 1041) or substitute. The personal representative 

must furnish the form to each beneficiary or nominee by 

the date on which the Form 1041 is filed.

Nominees. A person who holds an interest in an estate as a nominee for a beneficiary must provide the estate with the name and address of the beneficiary, and any 

other required information. The nominee must provide the 

beneficiary with the information received from the estate.

Penalty. A personal representative (or nominee) who 

fails to provide the correct information may be subject to a 

Publication 559 (2023) 33
$310 penalty for each failure. If it is shown that such failure 

is due to intentional disregard of the filing requirement, the 

penalty amount increases.

Consistent treatment of items. Beneficiaries must 

treat estate items the same way on their individual returns 

as those items are treated on the estate's income tax return. If their treatment is different from the estate's treatment, the beneficiary must file Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment 

Request (AAR), with the beneficiary’s return to identify the 

difference. If the beneficiary doesn't file Form 8082 and 

the estate has filed a return, the IRS can immediately assess and collect any tax and penalties that result from adjusting the item to make it consistent with the estate's 

treatment.

Bequest

A bequest is the act of giving or leaving property to another through the last will and testament. Generally, any 

distribution of income (or property in kind) to a beneficiary 

is an allowable deduction to the estate and is includible in 

the beneficiary's gross income to the extent of the estate's 

distributable net income. However, a distribution won't be 

an allowable deduction to the estate and won't be includible in the beneficiary's gross income if the distribution 

meets all the following requirements.

• It is required by the terms of the will.

• It is a gift or bequest of a specific sum of money or 

property.

• It is paid out in three or fewer installments under the 

terms of the will.

Specific sum of money or property. To meet this test, 

the amount of money or the identity of the specific property must be determinable under the decedent's will as of 

the date of death. To qualify as specific property, the property must be identifiable both as to its kind and its amount.

Example 1. D. Rogers' will provided that D. Rogers’ 

child, Taylor, receive D. Rogers’ interest in the Rogers-Jones partnership. D. Rogers’ other child, Angel, 

would receive a sum of money equal to the value of the 

partnership interest given to Taylor. The bequest to Taylor 

is a gift of a specific property ascertainable at the date of 

D. Rogers' death. The bequest of a specific sum of money 

to Angel is determinable on the same date.

Example 2. M. Jenkins' will provided that the surviving 

spouse, Riley, would receive money or property to be selected by the personal representative equal in value to half 

of M. Jenkins’ adjusted gross estate. The identity of the 

property and the money in the bequest are dependent on 

the personal representative's discretion and the payment 

of administration expenses and other charges, which 

aren't determinable at the date of M. Jenkins’ death. As a 

result, the provision isn't a bequest of a specific sum of 

money or of specific property, and any distribution under 

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 

sometime before distribution is immaterial. It isn't ascertainable by the terms of the will as of the date of death.

Distributions not treated as bequests. The following 

distributions aren't bequests that meet all the requirements listed earlier that allow a distribution to be excluded 

from the beneficiary's income and don't allow it as a deduction to the estate.

Paid only from income. An amount that can be paid 

only from current or prior income of the estate doesn't 

qualify even if it is specific in amount and there is no provision for installment payments.

Annuity. An annuity or a payment of money or of specific property in lieu of, or having the effect of, an annuity 

isn't the payment of specific property or a sum of money.

Residuary estate. If the will provides for the payment 

of the balance or residue of the estate to a beneficiary of 

the estate after all expenses and other specific legacies or 

bequests, that residuary bequest isn't a payment of specific property or a sum of money.

Gifts made in installments. Even if the gift or bequest is made in a lump sum or in three or fewer installments, it won't qualify as specific property or a sum of 

money if the will provides that the amount must be paid in 

more than three installments.

Conditional bequests. A bequest of specific property or 

a sum of money that may otherwise be excluded from the 

beneficiary's gross income won't lose the exclusion solely 

because the payment is subject to a condition.

Installment payments. Certain rules apply in determining whether a bequest of specific property or a sum of 

money has to be paid or credited to a beneficiary in more 

than three installments.

Personal items. Don't take into account bequests of 

articles for personal use, such as personal and household 

effects and automobiles.

Real property. Don't take into account specifically 

designated real property, the title to which passes under 

local law directly to the beneficiary.

Other property. All other bequests under the decedent's will for which no time of payment or crediting is 

specified and that are to be paid or credited in the ordinary 

course of administration of the estate are considered as 

required to be paid or credited in a single installment. 

Also, all bequests payable at any one specified time under 

the terms of the will are treated as a single installment.

Testamentary trust. In determining the number of installments that must be paid or credited to a beneficiary, 

the decedent's estate and a testamentary trust created by 

the decedent's will are treated as separate entities. 

Amounts paid or credited by the estate and by the trust 

are counted separately.

34 Publication 559 (2023)
Termination of Estate

The termination of an estate is generally marked by the 

end of the period of administration and by the distribution 

of the assets to the beneficiaries under the terms of the 

will or under the laws of succession of the state if there is 

no will. These beneficiaries may or may not be the same 

persons as the beneficiaries of the estate's income.

Period of Administration

The period of administration is the time actually required 

by the personal representative to assemble all the decedent's assets, pay all the expenses and obligations, and 

distribute the assets to the beneficiaries. This may be longer or shorter than the time provided by local law for the 

administration of estates.

Ends if all assets distributed. If all assets are distributed except a reasonable amount set aside, in good faith, 

for the payment of unascertained or contingent liabilities 

and expenses (but not including a claim by a beneficiary, 

as a beneficiary), the estate will be considered terminated.

Ends if period unreasonably long. If settlement is prolonged unreasonably, the estate will be treated as terminated for federal income tax purposes. From that point on, 

the income, deductions, and credits of the estate are considered those of the person or persons succeeding to the 

property of the estate.

Transfer of Unused Deductions to 

Beneficiaries

If the estate has unused loss carryovers or excess deductions for its last tax year, they are allowed to those beneficiaries who succeed to the estate's property. See Successor beneficiary, later.

Note. See Notice 2018-61 and Regulations section 

1.67-4 for more information about allowable beneficiary 

deductions.

Unused loss carryovers. An unused NOL carryover or 

capital loss carryover existing upon termination of the estate is allowed to the beneficiaries succeeding to the property of the estate. That is, these deductions will be 

claimed on the beneficiary's tax return. This treatment occurs only if a carryover would have been allowed to the estate in a later tax year if the estate had not been terminated.

Both types of carryovers generally keep their same 

character for the beneficiary as they had for the estate. 

However, if the beneficiary of a capital loss carryover is a 

corporation, the corporation will treat the carryover as a 

short-term capital loss regardless of its status in the estate. The NOL carryover and the capital loss carryover are 

used in figuring the beneficiary's AGI and taxable income. 

The beneficiary may have to adjust any NOL carryover in 

figuring the AMT.

The first tax year to which the loss is carried is the beneficiary's tax year in which the estate terminates. If the 

loss can be carried to more than 1 tax year, the estate's 

last tax year (whether or not a short tax year) and the beneficiary's first tax year to which the loss is carried each 

constitute a tax year for figuring the number of years to 

which a loss may be carried. A capital loss carryover from 

an estate to a corporate beneficiary will be treated as 

though it resulted from a loss incurred in the estate's last 

tax year (whether or not a short tax year), regardless of 

when the estate actually incurred the loss.

If the last tax year of the estate is the last tax year to 

which an NOL may be carried, see No double deductions, 

later. For a general discussion of NOLs, see Pub. 536. For 

a discussion of capital losses and capital loss carryovers, 

see Pub. 550.

Excess deductions. If the deductions in the estate's last 

tax year (other than the exemption deduction or the charitable contributions deduction) are more than gross income for that year, the beneficiaries succeeding to the estate's property can claim the excess as a deduction in 

figuring taxable income. To establish these deductions for 

the beneficiaries, a return must be filed for the estate 

along with a schedule showing the computation of each 

kind of deduction and the allocation of each to the beneficiaries.

Under Final Regulations - TD9918, each excess deduction on termination of an estate or trust retains its separate 

character as an amount allowed in arriving at AGI, a 

non-miscellaneous itemized deduction, or a miscellaneous itemized deduction. For more information, see the Instructions for Form 1041.

No double deductions. An NOL deduction allowable 

to a successor beneficiary can't be considered in figuring 

the excess deductions on termination. However, if the estate's last tax year is the last year in which a deduction for 

an NOL can be taken, the deduction, to the extent not absorbed in the last return of the estate, is treated as an excess deduction on termination. Any item of income or deduction, or any part thereof, taken into account in figuring 

an NOL or a capital loss carryover of the estate for its last 

tax year can't be used again to figure the excess deduction on termination.

Successor beneficiary. A beneficiary entitled to an unused loss carryover or an excess deduction is the beneficiary who, upon the estate's termination, bears the burden 

of any loss for which a carryover is allowed or of any deductions more than gross income.

If decedent had no will. If the decedent had no will, 

the beneficiaries are those heirs or next of kin to whom the 

estate is distributed. If the estate is insolvent, the beneficiaries are those to whom the estate would have been distributed had it not been insolvent. If the decedent's spouse 

is entitled to a specified dollar amount of property before 

any distributions to other heirs and the estate is less than 

that amount, the spouse is the beneficiary to the extent of 

the deficiency.

If decedent had a will. If the decedent had a will, a 

beneficiary normally means the residuary beneficiaries 

(including residuary trusts). Those beneficiaries who 

Publication 559 (2023) 35
receive specific property or a specific amount of money 

aren’t ordinarily considered residuary beneficiaries, except 

to the extent the specific amount isn't paid in full.

Also, a beneficiary who isn't strictly a residuary beneficiary, but whose devise or bequest is determined by the 

value of the estate as reduced by the loss or deduction, is 

entitled to the carryover or the deduction. This includes 

the following beneficiaries.

• A beneficiary of a fraction of the decedent's net estate 

after payment of debts, expenses, and specific bequests.

• A nonresiduary beneficiary, when the estate is unable 

to satisfy the bequest in full.

• A surviving spouse receiving a fractional share of the 

estate in fee under a statutory right of election when 

the losses or deductions are taken into account in determining the share. However, such a beneficiary 

doesn't include a recipient of a dower or curtesy, or a 

beneficiary who receives any income from the estate 

from which the loss or excess deduction is carried 

over.

Allocation among beneficiaries. The total of the unused loss carryovers or the excess deductions on termination that may be deducted by the successor beneficiaries 

is to be divided according to the share of each in the burden of the loss or deduction.

Example. Under the parent’s will, Ash is to receive 

$20,000. The remainder of the estate is to be divided 

equally between Ash’s siblings, Danny and Robin. After all 

expenses are paid, the estate has sufficient funds to pay 

Ash only $15,000, with nothing to Danny and Robin. In the 

estate's last tax year, there are excess deductions of 

$5,000 and $10,000 of unused loss carryovers. The total 

of the excess deductions and unused loss carryovers is 

$15,000 and Ash is considered a successor beneficiary to 

the extent of $5,000, so Ash is entitled to one-third of the 

unused loss carryover and one-third of the excess deductions. Ash’s siblings may divide the other two-thirds of the 

excess deductions and the unused loss carryovers between them.

Transfer of Credit for Estimated Tax 

Payments

When an estate terminates, the personal representative 

can elect to transfer to the beneficiaries the credit for all or 

part of the estate's estimated tax payments for the last tax 

year. To make this election, the personal representative 

must complete Form 1041-T, Allocation of Estimated Tax 

Payments to Beneficiaries, and file it either separately or 

with the estate's final Form 1041. The Form 1041-T must 

be filed by the 65th day after the close of the estate's tax 

year.

Filing Form 1041-T with Form 1041 doesn't 

change the due date for filing Form 1041-T. The 

IRS will reject a late-filed election. If Form 1041-T 

is rejected and Form 1041 was filed based on a successful election, then the personal representative must file an 

amended Form 1041, including amended Schedule(s) 

K-1.

The estimated tax allocated to each beneficiary is treated as paid or credited to the beneficiary on the last day of 

the estate's final tax year and must be reported in box 13 

of Schedule K-1 (Form 1041), using code A. If the estate 

terminated in 2023, this amount is treated as a payment of 

2023 estimated tax made by the beneficiary on January 

15, 2024.

Estate and Gift Taxes

This publication doesn't contain all the rules and 

exceptions for federal estate, gift, or generation-skipping transfer (GST) taxes, nor does it 

contain all the rules that apply to nonresident noncitizens. 

If you need more information, see Form 709; Form 706; 

Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return, Estate of nonresident not a citizen of the United States; and the related instructions. This 

publication also doesn't contain any information about 

state or local taxes. That information should be available 

from your state and local taxing authority.

The discussion below is to give you a general understanding of when estate, gift, and GST taxes apply and 

when they don't. It explains how much money or property 

can be given away during life or left to heirs at death before any tax will be owed. If the decedent gave someone 

money or property during the decedent’s life, the personal 

representative may have to pay the federal gift tax on behalf of the decedent if it wasn't previously paid. The money 

and property owned by the decedent at death is the estate 

and may be subject to federal estate tax. This is in addition to any federal income tax that is owed on the gross income of the estate.

Most gifts aren't subject to the gift tax and most estates 

aren't subject to the estate tax. For example, there is usually 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. 

If gifts are made to someone else, the gift tax usually 

doesn't apply until the value exceeds the annual exclusion 

for the year. See Annual exclusion under Gift Tax, later. 

Even if the gift or estate tax applies, it may be eliminated 

by the applicable credit amount, discussed later.

Person receiving the gift or bequest. Generally, the 

person who receives a gift or bequest of property from an 

estate won't have to pay any federal gift tax or estate tax. 

Also, that person won't have to pay income tax on the 

value of the gift or inheritance received.

Note. Gifts or bequests received from covered expatriates after June 16, 2008, may be subject to a tax which 

CAUTION

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CAUTION

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36 Publication 559 (2023)
must be paid by the recipient. Consult a qualified tax professional for more information.

No income tax deduction. Making a gift or leaving property from an estate to heirs doesn't ordinarily affect federal 

income tax liability. The value of gifts made (other than 

gifts that are charitable contributions) or any federal gift 

tax resulting from making those gifts can't be deducted 

from income tax liability. The value of any bequests made 

or estate tax resulting from making bequests is also not 

deductible from income tax liability.

Filing requirements. For estate tax purposes, the personal representative may be required to file Form 706. If 

death occurred in 2023, 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 than 

$12,920,000. Form 706 must also be timely filed if the estate elects to transfer any DSUE to a surviving spouse 

(this is also known as the portability election), regardless 

of the size of the gross estate.

If Form 706 is required, the return and payment of any 

tax is due within 9 months after the date of the decedent’s 

death. To apply for an extension of time to file the return 

and/or pay the tax due, use Form 4768, Application for Extension of Time To File a Return and/or Pay U.S. Estate 

(and Generation-Skipping Transfer) Taxes, to apply for an 

automatic 6-month extension of time to file.

An executor can only elect to transfer the DSUE 

amount to the surviving spouse if the Form 706 is filed 

timely; that is, within 9 months of the decedent's date of 

death or, if you have received an extension of time to file, 

before the 6-month extension period ends.

Note. Executors who did not have a filing requirement 

under section 6018(a) but failed to timely file Form 706 to 

make the portability election may be eligible for an extension under Rev. Proc. 2022-32, 2022-30 I.R.B. 101 (superseding Rev. Proc. 2017-34, 2017-26 I.R.B. 1282). Executors filing to elect portability may now file Form 706 on or 

before the fifth anniversary of the decedent's death.

The federal gift tax return, Form 709, is filed for every 

year in which a gift is made. However, a gift tax return isn’t 

generally required unless money or property worth more 

than the annual exclusion for that year is given to someone other than the decedent’s spouse or the gift given isn't 

subject to the annual exclusion. The annual gift exclusion 

is $17,000 for 2023. See Annual exclusion, later, for more 

information.

Generally, you must file Form 709 by April 15 of the 

year after the gift was made. An extension of time to file 

the return is available by filing Form 8892, Application for 

Automatic Extension of Time To File Form 709 and Form 

709-NA and/or Payment of Gift/Generation-Skipping 

Transfer Tax.

Note. Any extension of time granted for filing an individual tax return will also automatically extend the time to 

file your gift tax return. An income tax return extension is 

made on Form 4868, Application for Automatic Extension 

of Time To File U.S. Individual Income Tax Return.

Basic exclusion amount. The basic exclusion amount 

for decedents who died in 2023 is $12,920,000.

Beginning in 2011, a predeceased spouse's unused 

exclusion, the DSUE amount, may be added to the basic 

exclusion amount to determine the applicable exclusion 

amount. The DSUE amount is only available if an election 

is made on the Form 706 filed by the predeceased spouse’s estate.

The total of the basic exclusion amount and any DSUE 

amount received from the estate of a predeceased 

spouse is the applicable exclusion amount. This amount 

may be applied against tax due on lifetime gifts and/or 

transfers at death.

Applicable credit amount. A credit is an amount that reduces 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 2023, the credit on the basic exclusion amount is 

$5,113,800 (exempting $12,920,000 from tax). The total 

amount of applicable credit available to a person will equal 

the tax on the basic exclusion amount plus the tax on any 

DSUE amount.

For examples of how the credit works, see Applying the 

applicable credit to gift tax and Applying the applicable 

credit to estate tax, later.

Restored exclusion and GST exemption amounts. If 

a decedent made a taxable gift during the decedent's lifetime to the decedent's same-sex spouse and that transfer 

resulted in a reduction of the decedent's available applicable exclusion amount, there is a new procedure allowing 

the decedent to restore the exclusion that was utilized in 

the transfer. If a decedent made a taxable gift during the 

decedent's lifetime to a skip person whose generation assignment is changed as a result of Notice 2017-15, any 

GST exemption amount allocated to the gift will be 

deemed void. For more information, see the Instructions 

for Form 706 and Notice 2017-15, 2017-06 I.R.B. 783.

Gift Tax

The gift tax applies to lifetime transfers of property from 

one person (the donor) to another person (the donee). A 

gift is made if tangible or intangible property (including 

money), the use of property, or the right to receive income 

from property is given without expecting to receive something of at least equal value in return. If something is sold 

for less than its full value or if a loan is made without interest or with reduced (less than market rate) interest, a gift 

may have been made.

The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule.

Generally, the following gifts aren't taxable gifts.

• Gifts, excluding gifts of future interests, that aren't 

more than the annual exclusion for the calendar year.

Publication 559 (2023) 37
• Tuition or medical expenses paid directly to an educational or medical institution for someone else.

• Gifts to your spouse, if your spouse is a U. S. citizen.

• Gifts to a political organization for its use.

• Gifts to certain exempt organizations described in section 501(c)(4), 501(c)(5), and 501(c)(6).

• Gifts to charities.

Annual exclusion. A separate annual exclusion applies 

to each person to whom a gift is made. The gift tax annual 

exclusion is subject to cost-of-living increases.

Gift Tax Annual Exclusion

Year(s) Annual Exclusion

2002 – 2005 $11,000

2006 – 2008 $12,000

2009 – 2012 $13,000

2013 – 2017 $14,000

2018 – 2021 $15,000

2022 $16,000

2023 $17,000

In 2023, generally, gifts valued up to $17,000 per person could have been given to any number of people, and 

none of the gifts will be taxable. If the decedent's spouse 

is not a U. S. citizen, the annual exclusion for gifts made to 

the decedent’s spouse in 2023 is $175,000. However, gifts 

of future interests can't be excluded under the annual exclusion. A gift of a future interest is a gift that is limited so 

that its use, possession, or enjoyment will begin at some 

point in the future. If the decedent was married, both the 

decedent and spouse could have separately given gifts 

valued up to $17,000 to the same person without making 

a taxable gift. If one spouse gave a gift valued at more 

than the $17,000 exclusion, see Gift splitting, later.

Example 1. The decedent gave Madison, a relative, a 

cash gift of $8,000. It is the decedent’s only gift to Madison in 2023. The gift isn't a taxable gift because it isn't 

more than the $17,000 annual exclusion.

Example 2. The decedent paid the $17,000 college 

tuition of a friend directly to the friend’s college. Because 

the payment qualifies for the educational exclusion, the 

gift isn't a taxable gift.

Example 3. The decedent gave $27,000 to the decedent’s 25-year-old child. The first $17,000 of the gift isn't 

subject to the gift tax because of the annual exclusion. 

The remaining $10,000 is a taxable gift. As explained later 

under Applying the applicable credit to gift tax, the estate 

may not have to pay the gift tax on the remaining $10,000. 

However, a gift tax return must be filed.

More information. See Form 709 and its instructions for 

more information about taxable gifts.

Gift splitting. If the decedent or the decedent’s spouse 

made a gift to a third party, the gift can be considered as 

made one-half by the decedent and one-half by the decedent’s spouse. This is known as gift splitting. Both spouses must be U. S. citizens or residents, must agree to split 

the gift, and, in the case of a deceased spouse, the personal representative will act on behalf of the decedent. If 

there is consent to split the gift, both spouses can apply 

the annual exclusion to one-half of the gift. For gifts made 

in 2023, gift splitting allows married couples to give up to 

$34,000 to a person without making a taxable gift. If a gift 

is split, both spouses must file a gift tax return to show an 

agreement to use gift splitting. Form 709 must be filed 

even if half of the split gift is less than the annual exclusion.

Example. Jaden and Jaden’s spouse, Sammy, agreed 

to split the gifts that they made during 2023. Jaden’s sibling’s child, Morgan, received $21,000 from Jaden. Sammy’s sibling’s child, Jo, received $18,000 from Sammy. Although each gift is more than the annual exclusion 

($17,000), by gift splitting, they made these gifts without 

making a taxable gift. Jaden’s gift to Morgan is treated as 

one-half ($10,500) from Jaden and one-half ($10,500) 

from Sammy. Sammy’s gift to Jo is also treated as one-half 

($9,000) from Sammy and one-half ($9,000) from Jaden. 

In each case, because one-half of the split gift isn't more 

than the annual exclusion, it isn't a taxable gift. However, 

each of them must file a gift tax return.

Applying the applicable credit to gift tax. After you 

determine which gifts are taxable, figure the amount of gift 

tax on the total taxable gifts and apply the applicable 

credit for the year.

Example. In 2023, the decedent gave the following 

gifts and amounts to the following people.

• Morgan, a relative, a cash gift of $8,000. It is the decedent’s only gift to Morgan this year.

• Danny, a friend, the decedent paid the $17,000 college tuition.

• Avery, 25-year-old child, $27,000.

• Kai, 27-year-old child, $27,000.

The decedent never gave a taxable gift before and 

doesn't have any DSUE. Apply the exceptions to the gift 

tax and the applicable credit as follows.

1. Apply the educational exclusion. Payment of tuition 

expenses isn't subject to the gift tax. Therefore, the 

gift to Danny isn't a taxable gift.

2. Apply the annual exclusion. The first $17,000 given 

isn't a taxable gift. Therefore, the $8,000 gift to Morgan, the first $17,000 of the gift to Avery, and the first 

$17,000 of the gift to Kai aren't taxable gifts.

3. Apply the applicable credit. The gift tax on $20,000 

($10,000 remaining from the gift to Avery plus 

$10,000 remaining from the gift to Kai) is $3,800. Subtract the $3,800 from the applicable credit of 

$5,113,800 for 2023. The applicable credit that can 

38 Publication 559 (2023)
be used against the gift or estate tax in a later year is 

$5,110,000.

As the personal representative of the decedent's estate, you don't have to pay any gift tax for 2023. However, 

you do have to file Form 709.

For more information, see the Table for Computing Gift 

Tax in the Instructions for Form 709.

Filing a gift tax return. Generally, a gift tax return must 

be filed if any of the following apply.

• Gifts were given to at least one person (other than the 

decedent’s spouse) that are more than the annual exclusion for the year.

• The decedent and the decedent’s spouse split a gift.

• The decedent gave someone (other than decedent’s 

spouse) a gift of a future interest that the recipient 

can't actually possess, enjoy, or receive income from 

until some time in the future.

• The decedent gave the decedent’s spouse an interest 

in property that will be ended by some future event.

A gift tax return doesn't have to be filed to report gifts to 

(or for the use of) political organizations or gifts made by 

paying someone’s tuition or medical expenses.

The following deductible gifts made to charities also 

don't need to be reported.

• An entire interest in property, if no other interest has 

been transferred for less than adequate consideration 

or for other than a charitable use.

• A qualified conservation contribution that is a perpetual restriction on the use of real property.

More information. If you think you need to file a gift tax 

return, see Form 709 and its instructions for more information. You can get publications and forms at IRS.gov/

Forms. You may want to speak with a qualified tax professional to receive help with gift tax questions.

Estate Tax

Estate tax may apply to the decedent's taxable estate at 

death. The taxable estate is the gross estate less allowable deductions.

Gross estate. The gross estate includes the value of all 

property the decedent owns partially or in full at the time of 

death. Your gross estate also includes the following.

• Life insurance proceeds payable to the estate or, if the 

decedent owned the policy, to the decedent’s heirs.

• The value of certain annuities payable to the estate or 

the decedent’s heirs.

• The value of certain property the decedent transferred 

within 3 years before death.

Taxable estate. The allowable deductions used in determining the taxable estate include:

• 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 a qualifying charity 

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 District of Columbia).

More information. For more information on what is included in the gross estate and the allowable deductions, see 

Form 706 and Form 706-NA and their instructions.

Applying the applicable credit to estate tax. Basically, 

any applicable credit not used to eliminate gift tax can be 

used to eliminate or reduce estate tax. However, to determine the applicable credit available for use against the estate tax, you must complete Form 706.

Filing an estate tax return. An estate tax return must be 

filed if the gross estate, plus any adjusted taxable gifts and 

specific gift tax exemption, is more than the basic exclusion amount. The basic exclusion amount is generally 

equal to the filing requirement. For 2023, the basic exclusion amount is $12,920,000.

Note. The federal estate tax return doesn’t generally 

need to be filed unless the total value of lifetime transfers 

and the estate is worth more than the basic exclusion 

amount for the year of death. However, a complete and 

timely filed return is required if a deceased spouse’s estate elects portability of any unused exclusion amount for 

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 

the gross estate.

Note. The specific gift tax exemption applies only to 

gifts made after September 8, 1976, and before January 

1, 1977.

The applicable exclusion amount is the total amount exempted from gift and/or estate tax. For estates of decedents dying after December 31, 2010, the applicable exclusion amount equals the basic exclusion amount plus 

any DSUE amount. The DSUE amount is the remaining 

applicable exclusion amount from the estate of a predeceased spouse who died after December 31, 2010. The 

DSUE amount is only available where an election was 

made on the Form 706 filed by the deceased spouse’s estate.

Filing requirement. The following table lists the filing requirements for estates of decedents dying after 2011.

Publication 559 (2023) 39
Basic Exclusion Amount

Year of Death File return if estate’s value is 

more than:

2011 $5,000,000

2012 $5,120,000

2013 $5,250,000

2014 $5,340,000

2015 $5,430,000

2016 $5,450,000

2017 $5,490,000

2018 $11,180,000

2019 $11,400,000

2020 $11,580,000

2021 $11,700,000

2022 $12,060,000

2023* $12,920,000

* See IRS.gov for inflation adjusted amount.

More information. If you think the decedent will have an 

estate on which tax must be paid, or if the estate will have 

to file an estate tax return even if no tax will be due, see 

Form 706, Form 706-NA, and the forms’ instructions for 

more information. You can get publications and forms at 

IRS.gov/Forms. The estate’s personal representative may 

want to speak with a qualified tax professional to receive 

help with estate tax questions.

Consistent Basis Reporting 

Requirement

Certain executors are required to report the estate tax 

value of property passing from a decedent to the IRS and 

to the recipient of the property (beneficiary). The purpose 

of the requirement is to ensure that the appropriate value 

(or basis) is used to calculate the tax due from the sale or 

disposal of property received from an estate.

An executor of an estate (or other person) required to 

file an estate tax return after July 31, 2015, must provide a 

Form 8971 with attached Schedules A to the IRS, and a 

copy of the beneficiary's Schedule A to each beneficiary 

who receives or is to receive property from the estate. The 

Schedule A must show the final estate tax value of the 

property received or to be received by the beneficiary. An 

executor (or other person) who files an estate tax return 

only to make an election regarding the GST tax or portability of the DSUE is not required to provide Form 8971 and 

Schedule A. The executor is required to file Form 8971 

and all Schedules A with the IRS and provide the beneficiary with their Schedule A within 30 days of the earlier of 

the due date (including extensions) or filing of Form 706.

If Form 8971, Schedule A, Part 2, column C, received 

by the beneficiary indicates that the property increases 

the estate tax liability, the beneficiary must use a basis 

consistent with the final estate tax value of the property to 

determine the beneficiary’s basis in that property. Calculate a basis consistent with the final estate tax value by 

starting with the reported value and then making any allowed adjustments.

For more information, see sections 1014(f) and 6035, 

the Instructions for Form 8971 and Schedule A, and Column (e)—Cost or Other Basis in the Instructions for Form 

8949. Also, see the 2023 Instructions for Schedule D 

(Form 1041).

Generation-Skipping Transfer Tax

The generation-skipping transfer (GST) tax may apply to 

gifts during the decedent's life or transfers occurring at the 

decedent's death, called bequests, made to skip persons. 

A skip person is a person who belongs to a generation 

that is two or more generations below the generation of 

the donor. For instance, the decedent's grandchild will 

generally be a skip person to the decedent and the decedent’s spouse. The GST tax is figured on the amount of 

the gift or bequest transferred to a skip person, after subtracting any GST exemption allocated to the gift or bequest at the maximum gift and estate tax rates. Each individual has a GST exemption equal to the basic exclusion 

amount, as indexed for inflation, for the year the gift or bequest was made. GSTs have three forms: direct skip, taxable distribution, and taxable termination.

• A direct skip is a transfer made during the decedent's 

life or occurring at death that is:

1. Subject to the gift or estate tax,

2. Of an interest in property, and

3. Made to a skip person.

• A taxable distribution is any distribution from a trust to 

a skip person that isn't a direct skip or a taxable termination.

• A taxable termination is the end of a trust’s interest in 

property where the property interest will be transferred 

to a skip person.

More information. If you think the decedent has made a 

gift or bequest on which GST tax must be paid, see Form 

709, Form 706, Form 706-NA, and the forms’ instructions 

for more information. You can get publications and forms 

at IRS.gov/Forms. The estate’s personal representative 

may want to speak with a qualified tax professional to receive help with GST questions.

Example

The following is an example of a typical situation.

On April 9, 2023, your father, Jo Smith, died at the age 

of 72. Your father had not resided in a community property 

state and the will named you to serve as executor (personal representative). Except for specific bequests to your 

mother, Angel, of your parents' home and your father's automobile, and a bequest of $5,000 to the church your 

40 Publication 559 (2023)
father attended, your father's will named your mother and 

brother, Jamie, as beneficiaries.

After the court has approved your appointment as the 

executor, you should obtain an EIN for the estate. (See 

Duties under Personal Representatives, earlier.) Next, you 

use Form 56 to notify the IRS that you have been appointed executor of your father's estate.

Assets of the estate. Your father had the following assets when your father died.

• Checking account balance was $2,550 and savings 

account balance was $53,650.

• Your father inherited the home from your grandparents 

on March 5, 1980. At that time, it was worth $100,000, 

but was appraised at the time of your father's death at 

$500,000. The home was free of existing debts (or 

mortgages) at the time of your father’s death.

• Your father owned 500 shares of ABC Company stock 

that cost $10.20 a share in 1984. The stock had a 

mean selling price (midpoint between highest and lowest selling price) of $25 a share on the date of death. 

Your father also owned 500 shares of XYZ Company 

stock that cost $30 a share in 1989. The stock had a 

mean selling price on the date of death of $22.

• The appraiser valued your father's automobile at 

$6,300 and the household effects at $18,500.

• Your father's employer sent a check to your mother for 

$11,082 ($12,000 − $918 for social security and Medicare taxes), representing unpaid salary and payment 

for accrued vacation time. The statement that came 

with the check indicated that no amount was withheld 

for income tax. The check was made out to the estate, 

so your mother gave you the check.

• The Easy Life Insurance Company gave your mother a 

check for $275,000 because your mother was the 

beneficiary of your father’s life insurance policy.

• Your father was the owner of several series EE U.S. 

savings bonds on which your father named your 

mother as co-owner. Your father purchased the bonds 

during the past several years. The cost of these bonds 

totaled $2,500. After referring to the appropriate table 

of redemption values (see U.S. savings bonds acquired from decedent, earlier), you determine that interest of $840 had accrued on the bonds at the date of 

your father's death. You must include the redemption 

value of these bonds at date of death, $3,340, in your 

father's gross estate.

• On July 1, 1996, your parents purchased a house for 

$90,000. They have held the property for rental purposes continuously since its purchase. Your mother paid 

one-third of the purchase price, or $30,000, and your 

father paid $60,000. They owned the property, however, as joint tenants with right of survivorship. An appraiser valued the property at $120,000. You include 

$60,000, one-half the value, in your father's gross estate because your parents owned the property as joint 

tenants with right of survivorship and they were the 

only joint tenants.

Your mother also gave you a Form W-2 that your father's employer had sent. In examining it, you discover 

that your father had been paid $20,000 in salary between 

January 1, 2023, and April 9, 2023 (the date of death). 

The Form W-2 showed wages of $20,000 in box 1 and 

$845 as federal income tax withheld in box 2. The Form 

W-2 also indicated social security and Medicare wages of 

$20,000 in boxes 3 and 5. The estate received a Form 

1099-MISC from the employer showing $12,000 in box 3. 

The estate received a Form 1099-INT showing your father 

was paid $1,900 interest on the savings account at the 

First S&L of Juneville in 2023, before the date of death.

Final Return for Decedent—Form 

1040 or 1040-SR

From the papers in your father's files, you determine that 

the $20,000 paid to your father by the employer (as shown 

in box 1 of the Form W-2), rental income, and interest are 

the only items of income received between January 1 and 

the date of your father’s death. You will have to file an income tax return for the period during which your father 

lived. (You determine that your father timely filed the 2022 

income tax return before your father died.) The final return 

isn't due until April 15, 2024, the same date it would have 

been due had your father lived during all of 2023.

The check representing unpaid salary and earned but 

unused vacation time wasn't paid to your father before the 

date of death, so the $12,000 isn't reported as income on 

the final return. It is reported on the income tax return for 

the estate (Form 1041) for 2023. The only taxable income 

to be reported for your father will be the $20,000 salary (as 

shown in box 1 of the Form W-2), the $1,900 interest, and 

your father’s portion of the rental income that was received 

in 2023.

Your father was a cash basis taxpayer and didn't report 

the interest accrued on the series EE U.S. savings bonds 

on prior tax returns that were filed jointly with your mother. 

As the personal representative of your father's estate, you 

choose to report the interest earned on these bonds before your father's death ($840) on the final income tax return.

The rental property was leased the entire year of 2023 

for $1,000 per month. This is a net lease through the date 

of sale. The rental does not rise to the level of a section 

162 trade or business. Thus, it doesn’t qualify for the section 199A deduction. Under local law, your parents (as 

joint tenants) each had a half interest in the income from 

the property. Your father's will, however, stipulates that the 

entire rental income is to be paid directly to your mother. 

None of the rental income will be reported on the income 

tax return for the estate. Instead, your mother will report all 

the rental income and expenses on Form 1040 or 

1040-SR.

Checking the records and prior tax returns of your parents, you find that they previously elected to use the ADS 

with the mid-month convention. Under ADS, the rental 

house is depreciated using the straight line method over a 

40-year recovery period. They allocated $15,000 of the 

Publication 559 (2023) 41
cost to the land (which is never depreciable) and $75,000 

to the rental house. Salvage value was disregarded for the 

depreciation computation. Before 2023, $23,359 had 

been allowed as depreciation. (For information on ADS, 

see Pub. 946.)

Deductions. During the year, you received a bill from the 

hospital for $945 and bills from your father's doctors totaling $685. You paid these bills as they were presented. In 

addition, you find other bills from your father’s doctors totaling $5,302 that your father paid in 2023 and receipts for 

prescribed drugs purchased totaling $1,724. The funeral 

home presented you a bill for $6,890 for the expenses of 

your father's funeral, which you paid.

The medical expenses you paid from the estate's funds 

($945 and $685) were for your father's care and were paid 

within 1 year after the date of death. They won't be used to 

figure the taxable estate, so you can treat them as having 

been paid by your father when medical services were received. See Medical Expenses under Final Income Tax 

Return for Decedent—Form 1040 or 1040-SR, earlier. 

However, you can't deduct the funeral expenses either on 

your father's final return or on the estate's income tax return. They are deductible only on the federal estate tax return (Form 706).

In addition, after going over other receipts and canceled checks for the tax year with your mother, you determine that the following items are deductible on your parents' 2023 income tax return.

Health insurance ......................... $4,250

State income tax paid ...................... $1,491

Real estate tax on home ..................... $7,500

Contributions to church ..................... $4,830

Rental expenses included real estate taxes of $700 and 

mortgage interest of $410. In addition, insurance premiums of $260 and painting and repair expenses for $350 

were paid. These rental expenses totaled $1,720 and are 

reflected on Schedule E (Form 1040).

Your mother and father owned the property as joint tenants with right of survivorship and they were the only joint 

tenants, so your mother’s basis in this property upon your 

father's death is $93,047. This is figured by adding the 

$60,000 value of the half interest included in your father's 

gross estate to your mother's $45,000 share of the cost 

basis and subtracting your mother's $11,953 share of depreciation (including 2023 depreciation for the period before your father's death), as explained next.

For 2023, you must make the following computations to 

figure the depreciation deduction.

1. For the period before your father's death, depreciate 

the property using the same method, basis, and life 

used by your parents in previous years. They used the 

mid-month convention, so the amount deductible for 

31/2 months is $547. (This brings the total depreciation to $23,906 ($23,359 + $547) at the time of your 

father's death.)

2. For the period after your father's death, you must 

make two computations.

a. Your mother's cost basis ($45,000) minus one-half 

of the amount allocated to the land ($7,500) is 

your mother’s depreciable basis ($37,500) for half 

of the property. She continues to use the same life 

and depreciation method as was originally used 

for the property. The amount deductible for the remaining 81/2 months is $664.

b. The other half of the property must be depreciated 

using a depreciation method that is acceptable for 

property placed in service in 2023. You chose to 

use ADS with the mid-month convention. The 

value included in the estate ($60,000) less the 

value allocable to the land ($10,000) is the depreciable basis ($50,000) for this half of the property. 

The amount deductible for this half of the property 

is $886 ($50,000 × 0.01771). See chapter 4 and 

Table A-13 in Pub. 946.

Show the total of the amounts in (1) and (2a) above on 

line 17 of Form 4562, Depreciation and Amortization. 

Show the amount in (2b) on line 20d. The total depreciation deduction allowed for the year is $2,097.

Filing status. After December 31, 2023, when your 

mother determines the amount of your mother’s income, 

you and your mother must decide whether you will file a 

joint return or separate returns for your parents for 2023. 

Your mother has rental income and $400 of interest income from the savings account at the Mayflower Bank of 

Juneville, so it appears to be to your mother’s advantage 

to file a joint return.

Tax computation. The refund of tax due is $152. The 

computation is as follows:

Income:

Salary (per Form W-2) ............ $20,000

Interest income ............... 3,140

Net rental income ............. 8,183

Adjusted gross income .................... $31,323

Minus: Itemized deductions ............... 24,378

Balance ............................. $6,945

Taxable income ......................... 6,945

Income tax from tax table ................... $693

Minus: Tax withheld .................... $845

Refund of taxes........................ $152

Income Tax Return of an 

Estate—Form 1041

2023 income tax return. Having determined the tax liability for your father's final return, you now figure the estate's taxable income. You decide to use the calendar year 

and the cash method of accounting to report the estate's 

income. This return is also due by April 15, 2024.

In addition to the amount you received from your father's employer for unpaid salary and for vacation pay 

($12,000) entered on line 8, you received a dividend 

check from the XYZ Company on June 16, 2023. The 

check was for $750 and you enter it on line 2a. The 

42 Publication 559 (2023)
amount is a qualified dividend and you show the allocation 

to the beneficiaries and the estate on line 2b. The amount 

allocated to the beneficiary ($179) is based on the distributable dividend income before any deductions. The estate 

received a Form 1099-INT showing $2,250 interest paid 

by the bank on the savings account in 2023 after your father died. Show this amount on line 1.

Deductions. In November 2023, you received a bill for 

the real estate taxes on your parents' home. The bill was 

for $2,250, which you paid. Include real estate taxes on 

line 11.

You paid $1,325 for attorney's fees in connection with 

administration of the estate. This is an expense of administration and is deducted on line 14. If an estate tax return 

is filed on Form 706, you must, however, file with the return a statement in duplicate that such expense hasn't 

been claimed as a deduction from the gross estate for figuring the federal estate tax on Form 706, and that all rights 

to claim that deduction on Form 706 are waived.

Distributions. You made a distribution of $2,000 to 

your father's brother, Jamie. The distribution was made 

from current income of the estate under the terms of the 

will.

The income distribution deduction ($2,000) is figured 

on Schedule B of Form 1041 and deducted on line 18.

You characterized the $2,000 that is included in income 

and reported it on Schedule K-1 (Form 1041) as follows:

Step 1 — Allocation of Income & Deductions

Type of Income Amount Deductions

Distributable 

Net Income

Interest (15%) $ 2,250 ($536) $ 1,714

Dividends (5%) 750 (179) 571

Other Income (80%) 12,000 (2,860) 9,140

Total $15,000 ($3,575) $11,425

Step 2 — Allocation of Distribution

(Report on the Schedule K-1 for Jamie)

Line 1—Interest 

$2,000 × (1,714 ÷ 11,425) .................. $300

Line 2b—Total dividends 

$2,000 × (571 ÷ 11,425) ................... 100

Line 5—Other income

$2,000 × (9,140 ÷ 11,425) .................. 1,600

Total Distribution......................... $2,000

The estate took an income distribution deduction, so 

you must prepare Schedule I (Form 1041), regardless of 

whether the estate is liable for the AMT.

The other distribution you made from the assets of the 

estate in 2023 was the transfer of the automobile to your 

mother on July 1. This is included in the bequest of property, so it isn't included in computing the distributions of income to the beneficiary. The life insurance proceeds of 

$275,000 paid directly to your mother by the insurance 

company aren't an asset of the estate.

Tax computation. The taxable income of the estate 

for 2023 is $8,825, figured as follows:

Gross income:

Income in respect of a decedent .............. $12,000

Dividends ............................ 750

Interest .............................. 2,250

$15,000

Minus: Deductions and income distribution

Real estate taxes ................ $2,250

Attorney's fees .................. 1,325

Exemption .................... 600

Distribution .................... 2,000 6,175

Taxable income.......................... $8,825

The estate had taxable income of $8,825 that included 

$571 of qualified dividends for the year, which leaves the 

estate with a tax due of $1,661 for 2023. To figure the 

amount due, see the Qualified Dividends Tax Worksheet—Schedule G, line 1a, in the Instructions for Form 

1041.

2024 income tax return for estate. On January 7, 

2024, you receive a dividend check from the XYZ Company for $500. You also have interest posted to the savings account in January totaling $350. On January 28, 

2024, you make a final accounting to the court and obtain 

permission to close the estate. In the accounting, you list 

$1,650 as the balance of the expense of administering the 

estate.

You advise the court that you plan to pay $5,000 to 

Hometown Church under the provisions of the will, and 

that you will distribute the balance of the property to your 

mother, the remaining beneficiary.

Gross income. After making the distributions already 

described, you can wind up the affairs of the estate. The 

gross income of the estate for 2024 is more than $600, so 

you must file a final income tax return, Form 1041, for 

2024 (not shown). The estate's gross income for 2024 is 

$850 (dividends of $500 and interest of $350).

Deductions. After making the following computations, 

you determine that none of the distributions made to your 

mother must be included in your mother’s taxable income 

for 2024.

Gross income for 2024:

Dividends ............................ $500

Interest ............................. 350

$850

Less deductions:

Administration expense ................... $1,650

Loss ................................. ($800)

Note that because the contribution of $5,000 to Hometown Church wasn't required under the terms of the will to 

be paid out of the gross income of the estate, it isn't deductible and wasn't included in the computation.

The estate had no distributable net income in 2024, so 

none of the distributions made to your mother have to be 

included in your mother’s gross income.

Publication 559 (2023) 43
Checklist of Forms and Due Dates for Executor, 

Administrator, or Personal Representative

Table A.

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 

Return

9 months after date of decedent's death.

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 

Return, Estate of nonresident not a citizen of the United 

States

9 months after date of decedent's death.

709 United States Gift (and Generation-Skipping Transfer) Tax 

Return

April 15th of the year after the gift was made.

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 

Foreign Persons

March 15th.**

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 

U.S. Estate (and Generation-Skipping Transfer) Taxes

See form instructions.

4810 Request for Prompt Assessment Under Internal Revenue 

Code Section 6501(d)

As soon as possible after filing Form 1040 or Form 

1041.

4868 Application for Automatic Extension of Time To File U.S. 

Individual Income Tax Return

April 15th.**

5495 Request for Discharge From Personal Liability Under Internal 

Revenue Code Section 2204 or 6905

See form instructions.

7004 Application for Automatic Extension of Time To File Certain 

Business Income Tax, Information, and Other Returns

15th day of 4th month after end of estate's tax 

year.**

8300 Report of Cash Payments Over $10,000 Received in a Trade 

or Business

15th day after the date of the transaction.

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 

and Form 709-NA and/or Payment of Gift/

Generation-Skipping Transfer Tax 

April 15th.** 

* 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. 

44 Publication 559 (2023)
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)

Source

(list each payer)

A.

Enter total amount 

shown on 

information return

B.

Enter part of 

amount in column 

A reportable on 

decedent's final 

return

C.

Amount 

reportable on 

estate's or 

beneficiary's 

income tax 

return (column A 

minus column B)

D.

Part of column C 

that is income in 

respect of a 

decedent

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 (2023) 45
How To Get Tax Help

If you have questions about a tax issue; need help preparing your tax return; or want to download free publications, 

forms, or instructions, go to IRS.gov to find resources that 

can help you right away.

Preparing and filing your tax return. After receiving all 

your wage and earnings statements (Forms W-2, W-2G, 

1099-R, 1099-MISC, 1099-NEC, etc.); unemployment 

compensation statements (by mail or in a digital format) or 

other government payment statements (Form 1099-G); 

and interest, dividend, and retirement statements from 

banks and investment firms (Forms 1099), you have several options to choose from to prepare and file your tax return. You can prepare the tax return yourself, see if you 

qualify for free tax preparation, or hire a tax professional to 

prepare your return.

Free options for tax preparation. Your options for preparing and filing your return online or in your local community, if you qualify, include the following.

• Free File. This program lets you prepare and file your 

federal individual income tax return for free using software or Free File fillable forms. However, state tax 

preparation may not be available through Free File. Go 

to IRS.gov/FreeFile to see if you qualify for free online 

federal tax preparation, e-filing, and direct deposit or 

payment options.

• VITA. The Volunteer Income Tax Assistance (VITA) 

program offers free tax help to people with 

low-to-moderate incomes, persons with disabilities, 

and limited-English-speaking taxpayers who need 

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 preparation.

• TCE. The Tax Counseling for the Elderly (TCE) program offers free tax help for all taxpayers, particularly 

those who are 60 years of age and older. TCE volunteers specialize in answering questions about pensions and retirement-related issues unique to seniors. 

Go to IRS.gov/TCE or download the free IRS2Go app 

for information on free tax return preparation.

• MilTax. Members of the U.S. Armed Forces and qualified veterans may use MilTax, a free tax service offered by the Department of Defense through Military 

OneSource. For more information go to 

MilitaryOneSource (MilitaryOneSource.mil/MilTax).

Also, the IRS offers Free Fillable Forms, which can 

be completed online and then e-filed regardless of income.

Using online tools to help prepare your return. Go to 

IRS.gov/Tools for the following.

• The Earned Income Tax Credit Assistant (IRS.gov/

EITCAssistant) determines if you’re eligible for the 

earned income credit (EIC).

• The Online EIN Application (IRS.gov/EIN) helps you 

get an employer identification number (EIN), at no 

cost.

• The Tax Withholding Estimator (IRS.gov/W4App) 

makes it easier for you to estimate the federal income 

tax you want your employer to withhold from your paycheck. This is tax withholding. See how your withholding affects your refund, take-home pay, or tax due.

• The First-Time Homebuyer Credit Account Look-up 

(IRS.gov/HomeBuyer) tool provides information on 

your repayments and account balance.

• The Sales Tax Deduction Calculator (IRS.gov/

SalesTax) figures the amount you can claim if you 

itemize deductions on Schedule A (Form 1040).

Getting answers to your tax questions. On 

IRS.gov, you can get up-to-date information on 

current events and changes in tax law.

• IRS.gov/Help: A variety of tools to help you get answers to some of the most common tax questions.

• IRS.gov/ITA: The Interactive Tax Assistant, a tool that 

will ask you questions and, based on your input, provide answers on a number of tax topics.

• IRS.gov/Forms: Find forms, instructions, and publications. You will find details on the most recent tax 

changes and interactive links to help you find answers 

to your questions.

• You may also be able to access tax information in your 

e-filing software.

Need someone to prepare your tax return? There are 

various types of tax return preparers, including enrolled 

agents, certified public accountants (CPAs), accountants, 

and many others who don’t have professional credentials. 

If you choose to have someone prepare your tax return, 

choose that preparer wisely. A paid tax preparer is:

• Primarily responsible for the overall substantive accuracy of your return,

• Required to sign the return, and

• Required to include their preparer tax identification 

number (PTIN).

Although the tax preparer always signs the return, 

you're ultimately responsible for providing all the 

information required for the preparer to accurately 

prepare your return and for the accuracy of every item reported on the return. Anyone paid to prepare tax returns 

for others should have a thorough understanding of tax 

matters. For more information on how to choose a tax preparer, go to Tips for Choosing a Tax Preparer on IRS.gov.

Employers can register to use Business Services Online. The Social Security Administration (SSA) offers online service at SSA.gov/employer for fast, free, and secure 

online W-2 filing options to CPAs, accountants, enrolled 

agents, and individuals who process Form W-2, Wage 

CAUTION

!

46 Publication 559 (2023)
and Tax Statement, and Form W-2c, Corrected Wage and 

Tax Statement.

IRS Social Media. Go to IRS.gov/SocialMedia to see the 

various social media tools the IRS uses to share the latest 

information on tax changes, scam alerts, initiatives, products, and services. At the IRS, privacy and security are our 

highest priority. We use these tools to share public information with you. Don’t post your social security number 

(SSN) or other confidential information on social media 

sites. Always protect your identity when using any social 

networking site.

The following IRS YouTube channels provide short, informative videos on various tax-related topics in English, 

Spanish, and ASL.

• Youtube.com/irsvideos.

• Youtube.com/irsvideosmultilingua.

• Youtube.com/irsvideosASL.

Watching IRS videos. The IRS Video portal 

(IRSVideos.gov) contains video and audio presentations 

for individuals, small businesses, and tax professionals.

Online tax information in other languages. You can 

find information on IRS.gov/MyLanguage if English isn’t 

your native language.

Free Over-the-Phone Interpreter (OPI) Service. The 

IRS is committed to serving taxpayers with limited-English 

proficiency (LEP) by offering OPI services. The OPI Service is a federally funded program and is available at Taxpayer Assistance Centers (TACs), most IRS offices, and 

every VITA/TCE tax return site. The OPI Service is accessible in more than 350 languages.

Accessibility Helpline available for taxpayers with 

disabilities. Taxpayers who need information about accessibility services can call 833-690-0598. The Accessibility Helpline can answer questions related to current and 

future accessibility products and services available in alternative media formats (for example, braille, large print, 

audio, etc.). The Accessibility Helpline does not have access to your IRS account. For help with tax law, refunds, or 

account-related issues, go to IRS.gov/LetUsHelp.

Note. Form 9000, Alternative Media Preference, or 

Form 9000(SP) allows you to elect to receive certain types 

of written correspondence in the following formats.

• Standard print.

• Large print.

• Braille.

• Audio (MP3).

• Plain Text File (TXT).

• Braille Ready File (BRF).

Disasters. Go to IRS.gov/DisasterRelief to review the 

available disaster tax relief.

Getting tax forms and publications. Go to IRS.gov/

Forms to view, download, or print all of the forms, instructions, and publications you may need. Or, you can go to 

IRS.gov/OrderForms to place an order.

Getting tax publications and instructions in eBook 

format. Download and view most tax publications and instructions (including the Instructions for Form 1040) on 

mobile devices as eBooks at IRS.gov/eBooks.

IRS eBooks have been tested using Apple's iBooks for 

iPad. Our eBooks haven’t been tested on other dedicated 

eBook readers, and eBook functionality may not operate 

as intended.

Access your online account (individual taxpayers 

only). Go to IRS.gov/Account to securely access information about your federal tax account.

• View the amount you owe and a breakdown by tax 

year.

• See payment plan details or apply for a new payment 

plan.

• Make a payment or view 5 years of payment history 

and any pending or scheduled payments.

• Access your tax records, including key data from your 

most recent tax return, and transcripts.

• View digital copies of select notices from the IRS.

• Approve or reject authorization requests from tax professionals.

• View your address on file or manage your communication preferences.

Get a transcript of your return. With an online account, 

you can access a variety of information to help you during 

the filing season. You can get a transcript, review your 

most recently filed tax return, and get your adjusted gross 

income. Create or access your online account at IRS.gov/

Account.

Tax Pro Account. This tool lets your tax professional 

submit an authorization request to access your individual 

taxpayer IRS online account. For more information, go to 

IRS.gov/TaxProAccount.

Using direct deposit. The safest and easiest way to receive a tax refund is to e-file and choose direct deposit, 

which securely and electronically transfers your refund directly into your financial account. Direct deposit also 

avoids the possibility that your check could be lost, stolen, 

destroyed, or returned undeliverable to the IRS. Eight in 

10 taxpayers use direct deposit to receive their refunds. If 

you don’t have a bank account, go to IRS.gov/

DirectDeposit for more information on where to find a bank 

or credit union that can open an account online.

Reporting and resolving your tax-related identity 

theft issues. 

• Tax-related identity theft happens when someone 

steals your personal information to commit tax fraud. 

Publication 559 (2023) 47
Your taxes can be affected if your SSN is used to file a 

fraudulent return or to claim a refund credit.

• The IRS doesn’t initiate contact with taxpayers by 

email, text message (including shortened links), telephone calls, or social media channels to request or 

verify personal or financial information. This includes 

requests for personal identification numbers (PINs), 

passwords, or similar information for credit cards, 

banks, or other financial accounts.

• Go to IRS.gov/IdentityTheft, the IRS Identity Theft 

Central webpage, for information on identity theft and 

data security protection for taxpayers, tax professionals, and businesses. If your SSN has been lost or 

stolen or you suspect you’re a victim of tax-related 

identity theft, you can learn what steps you should 

take.

• Get an Identity Protection PIN (IP PIN). IP PINs are 

six-digit numbers assigned to taxpayers to help prevent the misuse of their SSNs on fraudulent federal income tax returns. When you have an IP PIN, it prevents someone else from filing a tax return with your 

SSN. To learn more, go to IRS.gov/IPPIN.

Ways to check on the status of your refund. 

• Go to IRS.gov/Refunds.

• Download the official IRS2Go app to your mobile device to check your refund status.

• Call the automated refund hotline at 800-829-1954.

The IRS can’t issue refunds before mid-February 

for returns that claimed the EIC or the additional 

child tax credit (ACTC). This applies to the entire 

refund, not just the portion associated with these credits.

Making a tax payment. Payments of U.S. tax must be 

remitted to the IRS in U.S. dollars. Digital assets are not 

accepted. Go to IRS.gov/Payments for information on how 

to make a payment using any of the following options.

• IRS Direct Pay: Pay your individual tax bill or estimated 

tax payment directly from your checking or savings account at no cost to you.

• Debit Card, Credit Card, or Digital Wallet: Choose an 

approved payment processor to pay online or by 

phone.

• Electronic Funds Withdrawal: Schedule a payment 

when filing your federal taxes using tax preparation 

software or through a tax professional.

• Electronic Federal Tax Payment System: Best option 

for businesses. Enrollment is required.

• Check or Money Order: Mail your payment to the address listed on the notice or instructions.

• Cash: You may be able to pay your taxes with cash at 

a participating retail store.

• Same-Day Wire: You may be able to do same-day 

wire from your financial institution. Contact your financial institution for availability, cost, and time frames.

CAUTION

!

Note. The IRS uses the latest encryption technology to 

ensure that the electronic payments you make online, by 

phone, or from a mobile device using the IRS2Go app are 

safe and secure. Paying electronically is quick, easy, and 

faster than mailing in a check or money order.

What if I can’t pay now? Go to IRS.gov/Payments for 

more information about your options.

• Apply for an online payment agreement (IRS.gov/

OPA) to meet your tax obligation in monthly installments if you can't pay your taxes in full today. Once 

you complete the online process, you will receive immediate notification of whether your agreement has 

been approved.

• Use the Offer in Compromise Pre-Qualifier to see if 

you can settle your tax debt for less than the full 

amount you owe. For more information on the Offer in 

Compromise program, go to IRS.gov/OIC.

Filing an amended return. Go to IRS.gov/Form1040X 

for information and updates.

Checking the status of your amended return. Go to 

IRS.gov/WMAR to track the status of Form 1040-X amended returns.

It can take up to 3 weeks from the date you filed 

your amended return for it to show up in our system, and processing it can take up to 16 weeks.

Understanding an IRS notice or letter you’ve received. Go to IRS.gov/Notices to find additional information about responding to an IRS notice or letter.

Responding to an IRS notice or letter. You can now 

upload responses to all notices and letters using the 

Document Upload Tool. For notices that require additional 

action, taxpayers will be redirected appropriately on 

IRS.gov to take further action. To learn more about the 

tool, go to IRS.gov/Upload.

Note. You can use Schedule LEP (Form 1040), Request for Change in Language Preference, to state a preference to receive notices, letters, or other written communications from the IRS in an alternative language. You may 

not immediately receive written communications in the requested language. The IRS’s commitment to LEP taxpayers is part of a multi-year timeline that began providing 

translations in 2023. You will continue to receive communications, including notices and letters, in English until they 

are translated to your preferred language.

Contacting your local TAC. Keep in mind, many questions can be answered on IRS.gov without visiting a TAC. 

Go to IRS.gov/LetUsHelp for the topics people ask about 

most. If you still need help, TACs provide tax help when a 

tax issue can’t be handled online or by phone. All TACs 

now provide service by appointment, so you’ll know in advance that you can get the service you need without long 

wait times. Before you visit, go to IRS.gov/TACLocator to 

find the nearest TAC and to check hours, available services, and appointment options. Or, on the IRS2Go app, 

CAUTION

!

48 Publication 559 (2023)
under the Stay Connected tab, choose the Contact Us option and click on “Local Offices.”

The Taxpayer Advocate Service (TAS) 

Is Here To Help You

What Is TAS?

TAS is an independent organization within the IRS that 

helps taxpayers and protects taxpayer rights. TAS strives 

to ensure that every taxpayer is treated fairly and that you 

know and understand your rights under the Taxpayer Bill 

of Rights.

How Can You Learn About Your Taxpayer 

Rights?

The Taxpayer Bill of Rights describes 10 basic rights that 

all taxpayers have when dealing with the IRS. Go to 

TaxpayerAdvocate.IRS.gov to help you understand what 

these rights means to you and how they apply. These are 

your rights. Know them. Use them.

What Can TAS Do for You?

TAS can help you resolve problems that you can’t resolve 

with the IRS. And their service is free. If you qualify for 

their assistance, you will be assigned to one advocate 

who will work with you throughout the process and will do 

everything possible to resolve your issue. TAS can help 

you if:

• Your problem is causing financial difficulty for you, 

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.

How Can You Reach TAS?

TAS has offices in every state, the District of Columbia, 

and Puerto Rico. To find your advocate’s number:

• Go to TaxpayerAdvocate.IRS.gov/Contact-Us;

• Download Pub. 1546, The Taxpayer Advocate Service 

Is Your Voice at the IRS, available at IRS.gov/pub/irspdf/p1546.pdf;

• Call the IRS toll free at 800-TAX-FORM 

(800-829-3676) to order a copy of Pub. 1546;

• Check your local directory; or

• Call TAS toll free at 877-777-4778.

How Else Does TAS Help Taxpayers?

TAS works to resolve large-scale problems that affect 

many taxpayers. If you know of one of these broad issues, 

report it to TAS at IRS.gov/SAMS. Be sure to not include 

any personal taxpayer information.

Low Income Taxpayer Clinics (LITCs)

LITCs are independent from the IRS and TAS. LITCs represent individuals whose income is below a certain level 

and who need to resolve tax problems with the IRS. LITCs 

can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, 

LITCs can provide information about taxpayer rights and 

responsibilities in different languages for individuals who 

speak English as a second language. Services are offered 

for free or a small fee. For more information or to find an 

LITC near you, go to the LITC page at 

TaxpayerAdvocate.IRS.gov/LITC or see IRS Pub. 4134, 

Low Income Taxpayer Clinic List , at IRS.gov/pub/irs-pdf/

p4134.pdf.

Publication 559 (2023) 49
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.

A

Accelerated death benefits 8, 19

Archer MSA 8, 17

Assistance (See Tax help)

Astronauts:

Tax forgiveness 11

B

Basis:

Inherited property 20

Joint interest property 20

Qualified joint interest 20

Beneficiary:

Basis of property 20

Character of distributions 32

Excess deductions 35

Income received 21

Liability, estate's income tax 23

Nonresident alien 23

Reporting distributions 33

Successor 35

Treatment of distributions 31

Unused loss carryovers 35

Bequest:

Defined 34

Property received 18

C

Claim, credit or refund 11

Combat zone 10

Comments 2

Coverdell education savings 

account (ESA) 8, 17

Credit:

Child tax 10

Earned income 10

Elderly or disabled 10

Final return for decedent 10

General business 10

D

Death benefits:

Accelerated 8, 19

Public safety officers 21

Decedent:

Final return 5

Income in respect of 13

Deductions:

Estate tax 17

In respect of decedent 17

Medical expenses 8

Standard 8

Distributable net income 27

Distributions:

Deduction 27

Limit on deduction 29

Not treated as bequests 34

Property, in kind 28

E

Education savings account, 

Coverdell 8, 17

Estate:

Income tax return 22

Insolvent 4

Period of administration 35

Tax deduction 17

Termination 35

Transfer of unused deductions 35

Estate tax deduction 17

Estimated tax 29, 36

Example:

Comprehensive 40

Decedent's final return 41

Estate's tax return 42

Exemption:

Estate's tax return 26

Expenses:

Accrued 27

Administration 26

Deductions in respect of 

decedent 17

Funeral 29

Medical 8, 29

Extension to file Form 1041 30

F

Fiduciary relationship 4

Filing requirements:

Decedent's final return 5

Estate's tax return 22

Final return for decedent:

Credits 10

Exemption and deductions 8

Filing requirements 5

Income to include 6

Joint return 6

Name, address, and signature 5

Other taxes 10

Payments 10

When and where to file 5

Who must file 5

Form:

1040-NR 6, 23

1041 22

1042 23

1310 6

4810 4

56 4

6251 10

706 36

SS–4 3

Funeral expenses 29

G

Gift, property 18

I

Identification number, 

application 3

Income:

Community 8

Distributable net income 27

Distributed currently 31

Interest and dividend 7

Partnership, final return 7

S corporation 7

Self-employment 7

Income in respect of decedent 13, 

16

Income tax return of an estate:

Credits, tax, and payments 29

Exemption and deductions 25

Filing requirements 22

Income to include 24

Name, address, and signature 30

When and where to file 30

Inherited IRAs 22

Inherited property 18

Installment obligations 14, 25

Insurance 18

J

Joint return:

Revoked by personal 

representative 6

Who can file 6

L

Losses:

Deduction on final return 9

Estate's tax return 26

M

Military or terrorist actions:

Claim for credit or refund 11

Defined 11

Tax forgiveness 10

N

Notice of fiduciary relationship:

Form 56 4

P

Partnership income 7, 15

Penalty:

Information returns 24

Substantial valuation 

misstatement 21

50 Publication 559 (2023)
Personal representative:

Defined 3

Duties 3

Fees received 5

Penalty 3, 4

Prompt assessment, request 4

Public safety officers, death 

benefits 21

Publications (See Tax help)

R

Refund:

File for decedent 5

Military or terrorist action deaths 11

Release from liability 4

Return:

Decedent's final 5

Estate's income tax 22

Information 23

Roth IRA 16

S

Separate shares rule 27

Suggestions 2

Surviving spouse 13

Survivors:

Income 21

Tax benefits 13

T

Tax:

Alternative minimum:

Estate 29

Individuals 10

Benefits, survivors 13

Estimated, estate 29, 36

Payments, final return 10

Refund of income (claim) 6

Self-employment 10

Transfer of credit 36

Tax help 46

Terrorist action, tax relief 10

Terrorist victim 11

V

Valuation method:

Inherited property 20

Special-use 20

Victims of terrorist attacks 11

W

Widows and widowers, tax benefits 

(See Surviving spouse)

Publication 559 (2023) 51