Double whammy – IRD triggers both estate and income taxes
Abstract: IRD refers to income earned or accrued during life, but not received until after death. It often results in double taxation because it’s included in the deceased’s taxable estate and it represents taxable income to the recipient — usually, the deceased’s estate, spouse or other beneficiaries. Unlike other types of assets, IRD assets don’t receive a stepped-up basis, which otherwise would eliminate income taxes. This article provides strategies to minimize the impact of IRD, while a sidebar illustrates how to calculate it.