IRD asset
Encyclopedia
The income in respect of a decedent (IRD) asset is part of inheritance
which consists of taxable income
to which the deceased person was entitled to, but failed to receive before their death. A typical case is the last paycheck
, which may be left not received.
Most of inherited
property
is not included in an heir’s taxable income, but IRD assets do.
While the tax basis of most of a decedent's assets are "stepped-up" for income tax purposes, IRD assets are not eligible for a "step-up" in basis, and hence may lead to double taxation
, and an income tax and estate tax.
Inheritance
Inheritance is the practice of passing on property, titles, debts, rights and obligations upon the death of an individual. It has long played an important role in human societies...
which consists of taxable income
Taxable income
Taxable income refers to the base upon which an income tax system imposes tax. Generally, it includes some or all items of income and is reduced by expenses and other deductions. The amounts included as income, expenses, and other deductions vary by country or system. Many systems provide that...
to which the deceased person was entitled to, but failed to receive before their death. A typical case is the last paycheck
Paycheck
Paycheck can also refer to:* Paycheck , short story by science fiction author Philip K. Dick* Paycheck , film adaptation of the Philip K. Dick short story starring Ben Affleck...
, which may be left not received.
Most of inherited
Inheritance
Inheritance is the practice of passing on property, titles, debts, rights and obligations upon the death of an individual. It has long played an important role in human societies...
property
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...
is not included in an heir’s taxable income, but IRD assets do.
While the tax basis of most of a decedent's assets are "stepped-up" for income tax purposes, IRD assets are not eligible for a "step-up" in basis, and hence may lead to double taxation
Double taxation
Double taxation is the systematic imposition of two or more taxes on the same income , asset , or financial transaction . It refers to taxation by two or more countries of the same income, asset or transaction, for example income paid by an entity of one country to a resident of a different country...
, and an income tax and estate tax.