Joyce passed away on January 3 while on an extended holiday cruise celebrating a very successful, and most profitable, previous year. Joyce was the chief executive officer of the Quillip Corporation. After the independent audit of Quillip's last year's financial statements was completed in February of this year, Joyce's estate received a $1,000,000 bonus check resulting from last year's corporate profits. Joyce's estate also sold Quillip stock for $500,000 in February of this year. Joyce originally purchased this stock eight years ago for $10,000. The stock was valued at $495,000 on her date of death. Solely based on the above facts, how much income in respect of a decedent should Joyce's estate report in the current year?

Question

Quizplus · Accepted Answer

The $1,000,000 bonus check is considered income in respect of a decedent (IRD) because it was earned by Joyce before her death but received by her estate after her death. The gain from the sale of stock is not IRD, as it is a capital gain realized by the estate.

Joyce Passed Away on January 3 While on an Extended