- 6 - income, the tax amounts to approximately $3,300; whereas, if the interest is lumped with petitioner’s salary and other income, the tax on the interest approximates $8,570. Respondent was not caught off guard by this strategy. With respect to the first issue, whether petitioner realized interest income during 2001, the Court sustains respondent. The accrued interest on the bonds, as the Court held in a parallel situation in Apkin v. Commissioner, 86 T.C. 692, 695 (1986), constituted “income in respect of a decedent” under section 691, which provides in pertinent part: SEC. 691(a). Inclusion in Gross Income.-- (1) General rule.--The amount of all items of gross income in respect of a decedent which are not properly includible in respect of the taxable period in which falls the date of his death or a prior period * * * shall be included in the gross income, for the taxable year when received, of: * * * * * * * (B) the person who, by reason of the death of the decedent, acquires the right to receive the amount, * * * Petitioner inherited the bonds when his mother died in 1999. Petitioner was not only her sole heir but was the sole legatee in her will. Additionally, petitioner was the named beneficiary on the bonds. No election had previously been made under section 454(a) by petitioner’s mother to have the annual interest on thePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
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