Income In Respect Of A Decedent - IRD

When our great uncle thrice removed passed away quite suddenly and left us as his sole beneficiary, we were shocked. After all, we’d never even met the guy. And now here we are, going through all of his stuff, trying to figure out what to do with his estate.

As it turns out, old Uncle Raul was still working when he kicked off, and his company owes him a paycheck. This money is considered income in respect of a decedent, or IRD: it’s money owed to someone who has died. IRD can include paychecks, dividends, uncollected debts (like rent), stock options, etc. Basically, if it’s money that for sure would have been coming to the dead person, it’s considered IRD.

As Uncle Raul’s beneficiary, that paycheck is now ours, but with one caveat: we’ve got to pay the income taxes on it. Okay, make that two caveats: we might also have to pay estate taxes on it, since it’s part of our inheritance and that stuff is taxed.

If paying double taxes on stuff really isn’t our style, we can file for a special deduction to avoid the double hit, so that’s good news. We’re also going to have to figure out what to do with Uncle Raul’s house, 401(k), and other possessions, but at least we’re on the road to getting this IRD thing figured out.