If there was no estate tax paid when the estate was settled, this IRD would simply be includable as income to the beneficiary of the estate. It retains the same character in the hands of the beneficiary as it had in the hands of the decedent.

In other words, treat the 1099R as if it were made out to your mother and include it as income. (Presumably she received the income…?)

Hope this helps -

jb

I have been trying to figure out what to do with a 1099R that was received this year from the company my dad worked for when he passed away in Dec 2009. I help mom complete their final joint tax return for the 2009 tax year so from the IRS perspective they are done with filings associated with dad’s SSN. I have spoken to two different IRS agents in the Advanced Issues area that state that the company who was informed of Dad’s death in Dec 2009 did not make the last pension payment correctly. That it should have been made out to dad’s estate (we really didn’t create one since all he had was jointly owned by mom – we didn’t go through probate -everything rolled to her) or to mom who by dad’s will was entitled to receive anything he was entitled to. The company states that they did everything right. I am just realizing that I was googling incorrectly for this situation with word like “payments after death” and wasn’t finding what I would have figured was a more common occurrence until this morning when I discovered that this payment was really “Income in respect of a decedent” (IRD). At least I know what to research now. Do you have any suggestions for me?

Sorry that it took some time to find the answer to this – it’s a great question, but not one that comes with an easily attainable answer.

The answer is that the IRD deduction will pass to the subsequent beneficiaries. I asked a couple of attorneys about this (without definitive answer) and finally found the answer in a book by Alan Acker, The Estate Planner’s Guide to IRD.

Hope this helps -

jb

Mary