Wendy sold property on the installment basis in 2012 for more than her basis in the property.Wendy was to receive installment payments at the end of each year for the next five years.In 2014,Wendy was killed in a car accident and the note was transferred to her estate.

Question

Quizplus · Accepted Answer

Wendy does not personally recognize the gain as a result of her death and subsequent transfer of the installment note to her estate.The deferred gain is merely shifted to the transferee estate (i.e. ,the gain is income in respect of the decedent),which is responsible for the payment of tax on the subsequent collections of the installment note.

Wendy Sold Property on the Installment Basis in 2012 for More