-5-
to the beneficiary, the portion equal to the value of the IRA on
the date of the decedent’s death, less any nondeductible
contributions made to the IRA, is income in respect of a decedent
(IRD) under section 691(a)(1).2 Estate of Kahn v. Commissioner,
supra. That portion is includable in the gross income of the
beneficiary in the year the distribution is received.3 Sec.
691(a)(1); Estate of Kahn v. Commissioner, supra. Any balance of
the distribution, which represents appreciation and income
accruing between the date of death and the date of the
distribution, is taxable to the beneficiary under sections
408(d)(1) and 72. Estate of Kahn v. Commissioner, supra.
The factual allegations deemed admitted by petitioner
establish: (1) Petitioner was the beneficiary of his deceased
father’s IRAs; (2) petitioner received lump-sum distributions
from the IRAs during 1999; and (3) no nondeductible contributions
were made to the IRAs. Therefore, we hold that the IRA
2Sec. 691(a)(1) provides that items of gross income in
respect of a decedent that are not properly includable by the
decedent in the year of his death or in a prior period are
included in the gross income for the taxable year when received
of the person who acquires the right to receive that amount.
Sec. 408(d)(1) provides that distributions made from an IRA are
included in the gross income of the distributee in the manner
provided under sec. 72.
3The recipient of an item of IRD, such as the beneficiary of
a decedent’s IRA, is allowed an income tax deduction equal to the
amount of Federal estate tax attributable to the IRD. Sec.
691(c); Estate of Smith v. United States, 391 F.3d 621, 626 (5th
Cir. 2004); Estate of Kahn v. Commissioner, 125 T.C. 227, 232
(2005).
Page: Previous 1 2 3 4 5 6 Next
Last modified: March 27, 2008