Income in Respect of a Decedent: Income Earned Before a Death
Published November 7, 2026
Publication 559 (2025), Survivors, Executors, and Administrators, explains the tax duties after a person dies. One part of the publication covers income in respect of a decedent. That is income the person earned, or had a right to, but did not receive before death. This guide covers that topic. It is general information. It is not advice about your case.
What the term means
Income in respect of a decedent is gross income the decedent would have received had death not occurred. It is income that was not properly included on the decedent's final income tax return. The publication says it must be included in income by one of three people. The first is the decedent's estate, if the estate receives it. The second is a beneficiary, if the right to the income passes directly to the beneficiary and the beneficiary receives it. The third is any person to whom the estate properly distributes the right to receive it.
Cash method and accrual method
The accounting method matters. The publication gives an example of a farmer who sold 1,000 bushels of apples for $2,000 and died before being paid. If the farmer used the cash method, the sale is income in respect of a decedent. The estate later transferred the right to the payment to a surviving spouse. The spouse includes the $2,000 when collected. It is not reported on the final return of the decedent or on the estate's return. If the farmer had used the accrual method, the amount would have been included on the final return instead.
The character stays the same
The publication says the character of the income is the same as it would have been had the decedent lived. If the income would have been a capital gain to the decedent, it is a capital gain to the person who receives it. Its example is a cash method seller of a tractor. The sale amount was $3,000, and the adjusted basis was $2,000. The seller died before payment. The gain of $1,000 is income in respect of a decedent.
Wages and other compensation
The publication says the entire amount of wages or other employee pay earned by the decedent, but unpaid at death, is income in respect of a decedent. The amount is not reduced by amounts withheld by the employer. Wages paid in the calendar year of death are subject to social security and Medicare taxes, and those taxes appear on the decedent's Form W-2. Wages paid after the year of death are generally not subject to federal income tax withholding.
Selling the right to the income
If a person transfers the right to income in respect of a decedent, the publication says that person must include the greater of two amounts. One is the amount received for the right. The other is the fair market value of the right. If the right is given as a gift, the person includes its fair market value on the date of the gift.
Installment payments
If the decedent sold property on an installment basis, the person who collects the payments uses the same gross profit percentage the decedent used. That person includes the same profit the decedent would have included had death not occurred. Publication 537 explains installment sales.
The estate tax deduction
If a federal estate tax return was filed, the publication says a beneficiary who includes income in respect of a decedent may be able to deduct the part of the estate tax attributable to that income. The deduction is a separate item from the income itself. The publication explains how to figure it.
What to do next
List what the person was owed at death. Note the date of death, the accounting method, and what was paid afterward. Decide who received the right to each payment. Then check whether the amount belongs on the final return, on the estate's return, or on a beneficiary's return. For the duties that come first after a death, see Survivors and Executors: Basic Tax Duties After a Death. For estate returns, see Estate Income and Form 1041: The Basics. For money or property received as an inheritance, see Gifts and Inheritances: Are They Income?.
Sources: Sources: IRS, Publication 559 (2025), Survivors, Executors, and Administrators, income in respect of a decedent (https://www.irs.gov/pub/irs-pdf/p559.pdf) This is general information, not advice about your specific return.
