Income in respect of a decedent – Why some gift horses deserve a hard look

Description

Abstract: The adage “don’t look a gift horse in the mouth” is often applied to inheritances. But for certain types of assets, a thorough inspection may reveal an unexpected tax bite. Most inherited property is tax free to the recipient, but there’s an exception for property that’s considered income in respect of a decedent (IRD). IRD can be a significant estate planning issue, especially if a person has large balances in an IRA or other retirement account — or inherits such assets. This article details what IRD is and how to plan for it. (Updated: 4/27/12)