Income in Respect of a Decedent: Mastering Sec. 691 IRD Calculations, Reporting and Planning Strategies

One of the most significant challenges for tax advisers of estates and their beneficiaries is navigating the rules governing IRD. Defined in only in Code Section 691 and its regulations, the concept of IRD permeates most aspects of estates and beneficiary tax reporting, and tax advisers need to be able to correctly calculate and report IRD and identify planning opportunities available to beneficiaries.

Section 691 provides that items of income earned or accrued during the life of the decedent but not received until after death must be claimed by both the estate and its beneficiaries. The estate may claim a deduction for the taxes due on the IRD; this presents a challenge in tracking and allocating the IRD when the estate tax return and the beneficiaries’ returns are prepared by different advisers.

In addition to ensuring that the Section 691 IRD deduction is properly allocated, tax advisers need to understand the planning opportunities available to minimize the overall tax impact of IRD on the estate’s beneficiaries. Strategies such as “deathbed Roth conversions” and transfer of IRD rights can lower the tax impact on beneficiaries if properly structured.

Listen as our experienced panelist provides a detailed and practical guide to calculating and reporting IRD, as well as navigating the planning opportunities available to affected taxpayers.

1. Statutory definitions of IRD
2. Calculations and allocations of IRD
3. Special considerations (receivables, etc.)
4. Planning opportunities through transfer of IRD rights
5. Reporting mechanics and challenges
6. Section 691(c) deductions in respect of a decedent

The panelist will discuss these and other important topics:

• Determining amount and character of IRD under Section 691
• Timing issues in reporting IRD
• Planning opportunities through transfer or rights to receive IRD
• Calculating the Section 691 IRD deduction from the decedent’s estate

Learning Objectives

After completing this course, you will be able to:

• Ascertain items of income that must be reported as IRD under the Section 691 rules
• Distinguish the tax treatment of special circumstances such as receivables and partnership income
• Recognize planning opportunities to minimize tax impact of by transferring rights to receive IRD
• Identify the rules for calculation and allocation of Section 691(c) IRD deduction from the estate tax return

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Basic knowledge of taxation.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).