Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Contents

Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Publication 559

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Survivors,

Executors, and

Administrators

Personal Representative . . . . . . . . . . . . . . . . . . . . 3

Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Fees Received . . . . . . . . . . . . . . . . . . . . . . . . . . 4

For use in preparing

2025 Returns

Final Income Tax Return for Decedent—Form

1040 or 1040-SR . . . . . . . . . . . . . . . . . . . . . . . . 5

Name, Address, and Signature . . . . . . . . . . . . . . 5

When and Where To File . . . . . . . . . . . . . . . . . . . 5

Filing Requirements . . . . . . . . . . . . . . . . . . . . . . 5

Income To Include . . . . . . . . . . . . . . . . . . . . . . . 6

Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Credits, Other Taxes, Payments . . . . . . . . . . . . . . 9

Tax Forgiveness for Armed Forces Members,

Victims of Terrorism, and Astronauts . . . . . . . 10

Filing Reminders . . . . . . . . . . . . . . . . . . . . . . . 12

Other Tax Information . . . . . . . . . . . . . . . . . . . . . . 13

Tax Benefits for Survivors . . . . . . . . . . . . . . . . . 13

Income in Respect of Decedent . . . . . . . . . . . . . 13

Deductions in Respect of Decedent . . . . . . . . . . 17

Estate Tax Deduction . . . . . . . . . . . . . . . . . . . . 17

Gifts, Insurance, Inheritances . . . . . . . . . . . . . . 18

Other Items of Income . . . . . . . . . . . . . . . . . . . . 21

Income Tax Return of an Estate—Form 1041 . . . . 22

Filing Requirements . . . . . . . . . . . . . . . . . . . . . 22

Income To Include . . . . . . . . . . . . . . . . . . . . . . 24

Exemption and Deductions . . . . . . . . . . . . . . . . 25

Credits, Tax, and Payments . . . . . . . . . . . . . . . . 29

Name, Address, and Signature . . . . . . . . . . . . . 30

When and Where To File . . . . . . . . . . . . . . . . . . 30

Distributions to Beneficiaries . . . . . . . . . . . . . . . . 30

Currently Distributed Income . . . . . . . . . . . . . . . 31

Other Amounts Distributed . . . . . . . . . . . . . . . . 31

Discharge of a Legal Obligation . . . . . . . . . . . . . 32

Character of Distributions . . . . . . . . . . . . . . . . . 32

How and When To Report . . . . . . . . . . . . . . . . . 33

Bequest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Termination of Estate . . . . . . . . . . . . . . . . . . . . 34

Estate and Gift Taxes . . . . . . . . . . . . . . . . . . . . . . 36

Gift Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Estate Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Final Return for Decedent . . . . . . . . . . . . . . . . . 41

Income Tax Return of an Estate . . . . . . . . . . . . . 42

Table A. Checklist of Forms and Due Dates . . . . . 45

Get forms and other information faster and easier at:

• IRS.gov (English)

• IRS.gov/Spanish (Español)

• IRS.gov/Chinese (中文)

Feb 4, 2026

• IRS.gov/Korean (한국어)

• IRS.gov/Russian (Pусский)

• IRS.gov/Vietnamese (Tiếng Việt)

Table B. Worksheet To Reconcile Amounts

Reported in Name of Decedent . . . . . . . . . . . 46

How To Get Tax Help . . . . . . . . . . . . . . . . . . . . . . . 47

Publication 559 (2025) Catalog Number 15107U

Department of the Treasury Internal Revenue Service www.irs.gov

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Future Developments

For the latest information about developments related to

Pub. 559, such as legislation enacted after it was

published, go to IRS.gov/Pub 559.

Reminders

Excess deductions on termination. Under IRS.gov/irb/

2020–45_IRB#TD-9918, each excess deduction on termination of an estate or trust retains its separate character

as an amount allowed in arriving at adjusted gross income

(AGI), a non-miscellaneous itemized deduction, or a miscellaneous itemized deduction. For more information, see

the Instructions for Form 1041.

Consistent treatment of estate and trust items. Beneficiaries must generally treat estate items the same way on

their individual returns as they are treated on the estate's

return.

Consistent basis reporting between estate and person acquiring property from a decedent. Certain executors are required to report the estate tax value of property passing from a decedent to the IRS and to the

recipient of the property (beneficiary). See Consistent Basis Reporting Requirement, later, for more information.

Filing status name changed to qualifying surviving

spouse. The filing status qualifying widow(er) is now

called qualifying surviving spouse. The rules for the filing

status have not changed. The same rules that applied to

qualifying widow(er) apply to qualifying surviving spouse.

See Qualifying surviving spouse, later.

Extension of time to elect portability. Effective July 8,

2022, Rev. Proc. 2022-32 provides a simplified method for

certain estates to obtain an extension of time to file a return on or before the fifth anniversary of the decedent’s

death to elect portability of the deceased spousal unused

exclusion (DSUE) amount. See Filing requirements, later,

for more information.

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for

Missing & Exploited Children® (NCMEC). Photographs of

missing children selected by the Center may appear in

this publication on pages that would otherwise be blank.

You can help bring these children home by looking at the

photographs

and

calling

1-800-THE-LOST

(1-800-843-5678) if you recognize a child.

Introduction

decedent. An example of the decedent's final tax return,

Form 1040, U.S. Individual Income Tax Return, and the

estate's income tax return, Form 1041, U.S. Income Tax

Return for Estates and Trusts, are discussed in this publication.

The publication also explains how much money or

property a taxpayer can give away during their lifetime or

leave to their heirs at their death, before any tax will be

owed. A discussion of Form 709, United States Gift (and

Generation-Skipping Transfer) Tax Return, and Form 706,

United States Estate (and Generation-Skipping Transfer)

Tax Return, is included.

Also included in this publication are the following items.

• A checklist of the forms you may need and their due

dates.

• A worksheet to reconcile amounts reported in the de-

cedent's name on information returns including Forms

W-2, Wage and Tax Statement; 1099-INT, Interest Income; 1099-DIV, Dividends and Distributions; etc. The

worksheet will help you correctly determine the income to report on the decedent's final return and on

the return for either the estate or a beneficiary.

Comments and suggestions. We welcome your comments about this publication and your suggestions for future editions.

You can send us comments through IRS.gov/

FormComments. Or, you can write to the Internal Revenue

Service, Tax Forms and Publications, 1111 Constitution

Ave. NW, IR-6526, Washington, DC 20224.

Although we can’t respond individually to each comment received, we do appreciate your feedback and will

consider your comments and suggestions as we revise

our tax forms, instructions, and publications. Don’t send

tax questions, tax returns, or payments to the above address.

Getting answers to your tax questions. If you have a

tax question not answered by this publication, or the How

To Get Tax Help section at the end of this publication, go

to the IRS Interactive Tax Assistant page at IRS.gov/

Help/ITA where you can find topics by using the search

feature or viewing the categories listed.

Getting tax forms, instructions, and publications. Go

to IRS.gov/Forms to download current and prior-year

forms, instructions, and publications.

Ordering tax forms, instructions, and publications.

Go to IRS.gov/OrderForms to order current forms, instructions, and publications; call 800-829-3676 to order

prior-year forms and instructions. The IRS will process

your order for forms and publications as soon as possible.

Don’t resubmit requests you’ve already sent us. You can

get forms and publications faster online.

This publication is designed to help those in charge (personal representatives) of the property (estate) of an individual who has died (decedent). It shows how to complete

and file federal income tax returns and explains their responsibility to pay any taxes due on behalf of the

2

Publication 559 (2025)

Useful Items

You may want to see:

Publication

3

3

SS-4 Application for Employer Identification Number

SS-4

56

• Apply for an employer identification number (EIN) for

the estate.

Armed Forces' Tax Guide

Form (and Instructions)

56

The personal representative must also perform the following duties.

Notice Concerning Fiduciary Relationship

1040 U.S. Individual Income Tax Return

1040

1040-SR U.S. Tax Return for Seniors

1040-SR

1041 U.S. Income Tax Return for Estates and Trusts

1041

706 United States Estate (and Generation-Skipping

Transfer) Tax Return

706

709 United States Gift (and Generation-Skipping

Transfer) Tax Return

709

1310 Statement of Person Claiming Refund Due a

Deceased Taxpayer

1310

See How To Get Tax Help near the end of this publication

for information about getting publications and forms. Also

near the end of this publication is Table A, a checklist of

forms and their due dates for the executor, administrator,

or personal representative.

Personal Representative

A personal representative of an estate is an executor, administrator, or anyone who is in charge of the decedent's

property. Generally, an executor (or executrix) is named in

a decedent's will to administer the estate and distribute

properties as the decedent has directed. An administrator

(or administratrix) is usually appointed by the court if no

will exists, if no executor was named in the will, or if the

named executor can't or won't serve.

In general, an executor and an administrator perform

the same duties and have the same responsibilities.

For estate tax purposes, if there is no executor or administrator appointed, qualified, and acting within the United States, the term “executor” includes anyone in actual

or constructive possession of any property of the decedent. It includes, among others, the decedent's agents

and representatives; safe-deposit companies, warehouse

companies, and other custodians of property in this country; brokers holding securities of the decedent as collateral; and the debtors of the decedent who are in this country.

Duties

The primary duties of a personal representative are to collect all the decedent's assets, pay the decedent’s creditors, and distribute the remaining assets to the heirs or

other beneficiaries.

Publication 559 (2025)

• File all tax returns, including income, estate, and gift

tax returns, when due.

• Pay the tax determined up to the date of discharge

from duties.

Other duties of the personal representative in federal tax

matters are discussed in other sections of this publication.

If any beneficiary is a nonresident alien, see Pub. 515,

Withholding of Tax on Nonresident Aliens and Foreign Entities, for information on the personal representative's duties as a withholding agent.

Penalty. There is a penalty for failure to file a tax return

when due unless the failure is due to reasonable cause.

Reliance on an agent (attorney, accountant, etc.) isn't reasonable cause for late filing. It is the personal representative's duty to file the returns for the decedent and the estate

when due.

Identification number. The first action you should take if

you’re the personal representative for the decedent is to

apply for an EIN for the estate. You should apply for this

number as soon as possible because you need to enter it

on returns, statements, and other documents you file concerning the estate. You must also give the identification

number to payers of interest and dividends and other payers who must file a return concerning the estate.

You can get an EIN by applying online at IRS.gov/EIN.

Generally, if you apply online, you will receive your EIN immediately upon completing the application. You can also

apply using Form SS-4. Generally, if you apply by mail, it

takes about 4 weeks to get your EIN. See IRS.gov/

Businesses/Small-Businesses-&-Self-Employed/

Employer-ID-Numbers-EINs for other ways to apply.

Payers of interest and dividends report amounts on

Forms 1099 using the identification number of the person

to whom the account is payable. After a decedent's death,

Forms 1099 must reflect the identification number (EIN, individual identification number (ITIN), or social security

number (SSN)) of the estate or beneficiary to whom the

amounts are payable. As the personal representative handling the estate, you must furnish this identification number to the payer. For example, if interest is payable to the

estate, the estate's EIN must be provided to the payer and

used to report the interest on Form 1099-INT. If the interest is payable to a surviving joint owner, the survivor's

identification number, such as an SSN or ITIN, must be

provided to the payer and used to report the interest.

If the estate or a survivor may receive interest or dividends after you inform the payer of the decedent's death,

the payer should give you (or the survivor) a Form W-9,

Request for Taxpayer Identification Number and Certification, or a similar substitute form. Complete this form to inform the payer of the estate's (or if completed by the survivor, the survivor's) identification number and return it to

the payer.

3

Caution: Don't use the deceased individual's identifying number to file an individual income tax return after the

decedent's final tax return. Also don't use the decedent's

identifying number to make estimated tax payments for a

tax year after the year of death.

Penalty. If you don't include the EIN or the taxpayer

identification number (TIN) of another person where it is

required on a return, statement, or other document, you

are liable for a penalty for each failure, unless you can

show reasonable cause. You are also liable for a penalty if

you don't give the TIN of another person when required on

a return, statement, or other document.

Notice of fiduciary relationship. The term “fiduciary”

means any person acting for another person. It applies to

persons who have positions of trust on behalf of others. It

generally includes a guardian, trustee, executor, administrator, receiver, or conservator. A personal representative

for a decedent's estate is also a fiduciary.

Form 56. If you are appointed to act in a fiduciary capacity for another, you must file a written notice with the

IRS stating this. Form 56 is used for this purpose. See the

Instructions for Form 56 for filing requirements and other

information.

File Form 56 as soon as all the necessary information

(including the EIN) is available. It notifies the IRS that you,

as the fiduciary, are assuming the powers, rights, duties,

and privileges of the decedent. The notice remains in effect until you notify the IRS (by filing another Form 56) that

your fiduciary relationship with the estate has terminated.

Termination of fiduciary relationship. Form 56

should also be filed to notify the IRS if your fiduciary relationship is terminated or when a successor fiduciary is appointed if the estate hasn't been terminated. See Form 56

and its instructions for more information.

At the time of termination of the fiduciary relationship,

you may want to file Form 4810, Request for Prompt Assessment Under Internal Revenue Code Section 6501(d),

and Form 5495, Request for Discharge From Personal Liability Under Internal Revenue Code Section 2204 or

6905, to wind up your duties as fiduciary. See below for a

discussion of these forms.

Request for prompt assessment (charge) of tax. The

IRS ordinarily has 3 years from the date an income tax return is filed, or its due date, whichever is later, to charge

any additional tax due. However, as a personal representative, you may request a prompt assessment of tax after

the return has been filed. This reduces the time for making

the assessment to 18 months from the date the written request for prompt assessment was received. This request

can be made for any tax return (except the estate tax return) of the decedent or the decedent's estate. This may

permit a quicker settlement of the tax liability of the estate

and an earlier final distribution of the assets to the beneficiaries.

Form 4810. Form 4810 can be used for making this request. It must be filed separately from any other document.

4

As the personal representative for the decedent's estate, you are responsible for any additional taxes that may

be due. You can request prompt assessment of any of the

decedent's taxes (other than federal estate taxes) for any

years for which the statutory period for assessment is

open. This applies even though the returns were filed before the decedent's death.

Failure to report income. If you or the decedent

failed to report substantial amounts of gross income (more

than 25% of the gross income reported on the return) or

filed a false or fraudulent return, your request for prompt

assessment won't shorten the period during which the IRS

may assess the additional tax. However, such a request

may relieve you of personal liability for the tax if you didn't

have knowledge of the unpaid tax.

Request for discharge from personal liability for tax.

An executor can make a request for discharge from personal liability for a decedent's income, gift, and estate

taxes. The request must be made after the returns for

those taxes are filed. To make the request, file Form 5495.

For this purpose, an executor is an executor or administrator that is appointed, qualified, and acting within the United States.

Within 9 months after receipt of the request, the IRS will

notify the executor of the amount of taxes due. If this

amount is paid, the executor will be discharged from personal liability for any future deficiencies. If the IRS hasn’t

notified the executor at the end of the 9-month period, the

executor will be discharged from personal liabilities.

Caution: Even if the executor is discharged from personal liability, the IRS will still be able to assess tax deficiencies against the executor to the extent the executor

still has any of the decedent's property.

Insolvent estate. Generally, if a decedent's estate is insufficient to pay all the decedent's debts, the debts due to

the United States must be paid first. Both the decedent's

federal income tax liabilities at the time of death and the

estate's income tax liability are debts due to the United

States. The personal representative of an insolvent estate

is personally responsible for any tax liability of the decedent or of the estate if the personal representative had notice of such tax obligations or failed to exercise due care in

determining if such obligations existed before distribution

of the estate's assets and before being discharged from

duties. The extent of such personal responsibility is the

amount of any other payments made before paying the

debts due to the United States, except where such other

debt paid has priority over the debts due to the United

States. Income tax liabilities need not be formally assessed for the personal representative to be liable if the

personal representative was aware or should have been

aware of their existence.

Fees Received by Personal

Representatives

All personal representatives must include fees paid to

them from an estate in their gross income. If you aren't in

Publication 559 (2025)

the trade or business of being an executor (for instance,

you are the executor of a friend's or relative's estate), report these fees on your Schedule 1 (Form 1040), line 8z. If

you are in the trade or business of being an executor, report fees received from the estate as self-employment income on Schedule C (Form 1040), Profit or Loss From

Business.

If the estate operates a trade or business and you, as

executor, actively participate in the trade or business while

fulfilling your duties, any fees you receive related to the

operation of the trade or business must be reported as

self-employment income on Schedule C (Form 1040).

Final Income Tax Return for

Decedent—Form 1040 or

1040-SR

The personal representative (defined earlier) must file the

final income tax return (Form 1040 or 1040-SR) of the decedent for the year of death and any returns not filed for

preceding years. A surviving spouse, under certain circumstances, may have to file the returns for the decedent.

See Joint Return, later.

Return for preceding year. If an individual died after the

close of the tax year, but before the return for that year

was filed, the return for the year just closed won't be the

final return. The return for that year will be a regular return

and the personal representative must file it.

Example. S. Smith died on March 21, 2025, before filing their 2024 tax return. The taxpayer’s personal representative must file the 2024 return by April 15, 2025. The

final tax return covering the period from January 1, 2025,

to March 21, 2025, is due April 15, 2026.

Note: See When and Where To File, later, if the due

date falls on a weekend or legal holiday. See Pub. 509,

Tax Calendars, for a list of all legal holidays.

Name, Address, and Signature

Write the word “DECEASED,” the decedent's name, and

the date of death across the top of the tax return. If filing a

joint return, write the name and address of the decedent

and the surviving spouse in the name and address fields.

If a joint return isn't being filed, write the decedent's name

in the name field and the personal representative's name

and address in the address field.

Third party designee. You can check the “Yes” box in

the Third Party Designee area on Form 1040 or 1040-SR

to authorize the IRS to discuss the return with a friend, a

family member, or any other person you choose. This allows the IRS to call the person you identified as the designee to answer any questions that may arise during the

processing of the return. It also allows the designee to

perform certain actions. See the Instructions for Form

1040 (and 1040-SR) for details.

Publication 559 (2025)

Signature. If a personal representative has been appointed, that person must sign the return. If it is a joint return,

the surviving spouse must also sign it. If no personal representative has been appointed, the surviving spouse (on

a joint return) signs the return and writes in the signature

area “Filing as surviving spouse.” If no personal representative has been appointed and if there is no surviving

spouse, the person in charge of the decedent's property

must file and sign the return as “personal representative.”

Paid preparer. If you pay someone to prepare, assist in

preparing, or review the tax return, that person must sign

the return and fill in the other blanks in the Paid Preparer

Use Only area of the return. See the Instructions for Form

1040 (and 1040-SR) for details.

When and Where To File

The final income tax return is due at the same time the decedent's return would have been due had death not occurred. A final return for a decedent who was a calendar year

taxpayer is generally due on April 15 following the year of

death, regardless of when during that year death occurred. However, when the due date falls on a Saturday, Sunday, or legal holiday, the return is filed timely if filed by the

next business day.

Generally, you must file the final income tax return of

the decedent with the Internal Revenue Service Center for

the place where you live. A tax return for a decedent can

be electronically filed. A personal representative may also

obtain an income tax filing extension on behalf of a decedent.

Filing Requirements

The gross income, age, and filing status of a decedent

generally determine whether a return must be filed. Gross

income is all income received by an individual from any

source in the form of money, goods, property, and services that isn't tax-exempt. It includes gross receipts from

self-employment, but if the business involves manufacturing, merchandising, or mining, subtract any cost of goods

sold. In general, filing status depends on whether the decedent was considered single or married at the time of

death. See the income tax return instructions or Pub. 501,

Dependents, Standard Deduction, and Filing Information.

Refund

A return must be filed to obtain a refund if tax was withheld

from salaries, wages, pensions, or annuities, or if estimated tax was paid, even if a return isn't otherwise required

to be filed. Also, the decedent may be entitled to other

credits that result in a refund. These advance payments of

tax and credits are discussed later under Credits, Other

Taxes, and Payments.

Form 1310, Statement of Person Claiming Refund

Due a Deceased Taxpayer. Form 1310 doesn't have to

5

be filed if you are claiming a refund and either of the following applies to you.

• You are a surviving spouse filing an original or amended joint return with the decedent.

• You are a court-appointed or certified personal repre-

sentative filing the decedent’s original return and a

copy of the court certificate showing your appointment

is attached to the return.

Note: If the personal representative is filing a claim for

refund on Form 1040-X, Amended U.S. Individual Income

Tax Return, or Form 843, Claim for Refund and Request

for Abatement, you must attach a court certificate showing

your appointment to Form 1310, even if you have previously filed that certificate with the IRS.

Example. E. Green died before filing the tax return.

You were appointed the personal representative for E.

Green's estate, and you file the Form 1040 or 1040-SR

showing a refund due. You don't need Form 1310 to claim

the refund if you attach a copy of the court certificate to

the tax return showing you were appointed the personal

representative.

Tip: If you are a surviving spouse and you receive a tax

refund check in both your name and your deceased spouse's name, you can have the check reissued in your name

alone. Return the joint-name check marked “VOID” along

with Form 1310 to your local IRS office or the service center where you mailed your return, along with a written request for reissuance of the refund check. A new check will

be issued in your name and mailed to you.

Death certificate. When filing the decedent's final income tax return, don't attach the death certificate or other

proof of death to the final return. Instead, keep it for your

records and provide it if requested.

Nonresident Alien

If the decedent was a nonresident alien who would have

had to file Form 1040-NR, U.S. Nonresident Alien Income

Tax Return, you must file that form for the decedent's final

tax year. See the Instructions for Form 1040-NR for the filing requirements, due date, and where to file.

Joint Return

Generally, the personal representative and the surviving

spouse can file a joint return for the decedent and the surviving spouse. However, the surviving spouse alone can

file the joint return if no personal representative has been

appointed before the due date for filing the final joint return

for the year of death. This also applies to the return for the

preceding year if the decedent died after the close of the

preceding tax year and before filing the return for that year.

The income of the decedent that was includible on the decedent’s return for the year up to the date of death (see

Income To Include, later) and the income of the surviving

spouse for the entire year must be included on the final

joint return.

6

A final joint return with the decedent can't be filed if the

surviving spouse remarried before the end of the year of

the decedent's death. The filing status of the decedent in

this instance is married filing a separate return.

For information about tax benefits to which a surviving

spouse may be entitled, see Tax Benefits for Survivors,

later, under Other Tax Information.

Personal representative may revoke joint return election. A court-appointed personal representative may revoke an election to file a joint return previously made by

the surviving spouse alone. This is done by filing a separate return for the decedent within 1 year from the due

date of the return (including any extensions). The joint return filed by the surviving spouse will then be regarded as

the separate return of that spouse by excluding the decedent's items and refiguring the tax liability.

Relief from joint liability. In some cases, one spouse

may be relieved of joint liability for tax, interest, and penalties on a joint return for items of the other spouse that

were incorrectly reported on the joint return. If the decedent qualified for this relief while alive, the personal representative can pursue an existing request, or file a request,

for relief from joint liability. For information on requesting

this relief, see Pub. 971, Innocent Spouse Relief.

Income To Include

The decedent's income includible on the final return is

generally determined as if the person were still alive except that the tax period is usually shorter because it ends

on the date of death. The method of accounting regularly

used by the decedent before death also determines the income includible on the final return. This section explains

how some types of income are reported on the final return.

For more information about accounting methods, see

Pub. 538, Accounting Periods and Methods.

Cash Method

If the decedent accounted for income under the cash

method, only those items actually or constructively received before death are included on the final return.

Constructive receipt of income. Interest from coupons

on the decedent's bonds is constructively received by the

decedent if the coupons matured in the decedent's final

tax year but had not been cashed. Include the interest income on the final return.

Generally, a dividend is considered constructively received if it was available for use by the decedent without

restriction. If the corporation customarily mailed its dividend checks, the dividend was includible when received.

If the individual died between the time the dividend was

declared and the time it was received in the mail, the decedent didn't constructively receive it before death. Don't

include the dividend on the final return.

Publication 559 (2025)

Accrual Method

Partnership Income

Generally, under an accrual method of accounting, income is reported when earned.

The death of a partner closes the partnership's tax year for

that partner. Generally, it doesn't close the partnership's

tax year for the remaining partners. The decedent's distributive share of partnership items must be figured as if

the partnership's tax year ended on the date the partner

died. To avoid an interim closing of the partnership books,

the partners can agree to estimate the decedent's distributive share by prorating the amounts the partner would

have included for the entire partnership tax year.

If the decedent used an accrual method, only the income items normally accrued before death are included

on the final return.

Interest and Dividend Income (Forms 1099)

Form(s) 1099 reporting interest and dividends earned by

the decedent before death should be received and the

amounts included on the decedent's final return. A separate Form 1099 should show the interest and dividends

earned after the date of the decedent's death and paid to

the estate or other recipient that must include those

amounts on its return. You can request corrected Forms

1099 if these forms don't properly reflect the right recipient

or amounts.

On the decedent's final return, include the decedent's

distributive share of partnership items for the following periods.

For example, a Form 1099-INT, reporting interest payable to the decedent, may include income that should be

reported on the final income tax return of the decedent, as

well as income that the estate or other recipient should report, either as income earned after death or as income in

respect of the decedent (discussed later). For income

earned after death, you should ask the payer for a Form

1099 that properly identifies the recipient (by name and

identification number) and the proper amount. If that isn't

possible, or if the form includes an amount that represents

income in respect of the decedent, report the interest as

shown under How to report next.

Example. M. Smith was a partner in XYZ partnership

and reported the income on a tax year ending December

31. The partnership uses a tax year ending June 30. M.

Smith died August 31, 2025, and the estate established its

tax year through August 31.

The distributive share of partnership items based on

the decedent's partnership interest is reported as follows.

See U.S. savings bonds acquired from decedent under

Specific Types of Income in Respect of a Decedent, later,

for information on savings bond interest that may have to

be reported on the final return.

• Income Tax Return of the Estate—September 1, 2025,

How to report. If you are preparing the decedent's final

return and you have received a Form 1099-INT for the decedent that includes amounts belonging to the decedent

and to another recipient (the decedent's estate or another

beneficiary), report the total interest shown on Form

1099-INT on Schedule B (Form 1040), Interest and Ordinary Dividends. Next, enter a subtotal of the interest

shown on Forms 1099, and the interest reportable from

other sources for which you didn't receive Forms 1099.

Then, show any interest (including any interest you receive as a nominee) belonging to another recipient separately and subtract it from the subtotal. Identify the amount

of this adjustment as “Nominee Distribution” or other appropriate designation.

Report dividend income for which you received a Form

1099-DIV on the appropriate schedule using the same

procedure.

Note: If the decedent received amounts as a nominee,

you must give the actual owner a Form 1099, unless the

owner is the decedent's spouse. See the General

Instructions for Certain Information Returns for more information on filing Forms 1099.

S Corporation Income

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1. The partnership's tax year that ended within or with

the decedent's final tax year (the year ending on the

date of death).

2. The period, if any, from the end of the partnership's

tax year in (1) to the decedent's date of death.

• Final Return for the Decedent—January 1 through Au-

gust 31, 2025, includes XYZ partnership items from

(a) the partnership tax year ending June 30, 2025; and

(b) the partnership tax year beginning July 1, 2025,

and ending August 31, 2025 (the date of death).

through August 31, 2026, includes XYZ partnership

items for the period September 1, 2025, through June

30, 2026.

If the decedent was a shareholder in an S corporation, include on the final return the decedent's share of the S corporation's items of income, loss, deduction, and credit for

the following periods.

1. The corporation's tax year that ended within or with

the decedent's final tax year (the year ending on the

date of death).

2. The period, if any, from the end of the corporation's

tax year in (1) to the decedent's date of death.

Self-Employment Income

Include self-employment income actually or constructively

received or accrued, depending on the decedent's accounting method. For self-employment tax purposes only,

the decedent's self-employment income will include the

decedent's distributive share of a partnership's income or

loss through the end of the month in which death occurred. For this purpose, the partnership's income or loss is

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considered to be earned ratably over the partnership's tax

year.

the sale or assignment of the contract to a viatical settlement provider.

Community Income

Generally, if the decedent received accelerated death

benefits on the life of a terminally or chronically ill individual, whether on the decedent’s own life or on the life of another person, those benefits aren't included in the decedent's income. For more information, see the discussion

under Gifts, Insurance, and Inheritances, under Other Tax

Information, later.

If the decedent was married and domiciled in a community

property state, half of the income received and half of the

expenses paid during the decedent's tax year by either the

decedent or spouse may be considered to be the income

and expenses of the other. For more information, see Pub.

555, Community Property.

HSA, Archer MSA, or Medicare Advantage

MSA

The treatment of an HSA (health savings account), an

Archer MSA (medical savings account), or a Medicare Advantage MSA at the death of the account holder depends

on who acquires the interest in the account. If the decedent's estate acquires the interest, the fair market value

(FMV) of the assets in the account on the date of death is

included in income on the decedent's final return. The estate tax deduction, discussed later, doesn't apply to this

amount.

If a beneficiary acquires the interest, see the discussion

under Income in Respect of a Decedent, later. For other

information on HSAs, Archer MSAs, or Medicare Advantage MSAs, see Pub. 969, Health Savings Accounts and

Other Tax-Favored Health Plans.

Coverdell Education Savings Account (ESA)

Generally, the balance in a Coverdell ESA must be distributed within 30 days after the individual for whom the account was established reaches age 30, or dies, whichever

is earlier. The treatment of the Coverdell ESA at the death

of an individual under age 30 depends on who acquires

the interest in the account. If the decedent's estate acquires the interest, the earnings on the account must be

included on the final income tax return of the decedent.

The estate tax deduction, discussed later, doesn't apply to

this amount. If a beneficiary acquires the interest, see the

discussion under Income in Respect of a Decedent, later.

The age 30 limitation doesn't apply if the individual for

whom the account was established or the beneficiary that

acquires the account is an individual with special needs.

This includes an individual who, because of a physical,

mental, or emotional condition (including a learning disability), requires additional time to complete the individual’s

education.

For more information on Coverdell ESAs, see Pub. 970,

Tax Benefits for Education.

Accelerated Death Benefits

Accelerated death benefits are amounts received under a

life insurance contract before the death of the insured individual. These benefits also include amounts received on

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Deductions

Generally, the rules for deductions allowed to an individual

also apply to the decedent's final income tax return. Show

on the final return deductible items the decedent paid (or

accrued, if the decedent reported deductions on an accrual method) before death. This section contains a detailed discussion of medical expenses because the tax

treatment of the decedent's medical expenses can be different. See Medical Expenses, later.

Standard Deduction

If you don't itemize deductions on the final return, the full

amount of the appropriate standard deduction is allowed

regardless of the date of death. For information on the appropriate standard deduction, see the Form 1040 and

1040-SR instructions or Pub. 501.

Medical Expenses

Medical expenses paid before death by the decedent are

deductible, subject to limits, on the final income tax return

if deductions are itemized. This includes expenses for the

decedent, as well as for the decedent's spouse and dependents.

Caution: Qualified medical expenses aren't deductible

if paid with a tax-free distribution from an HSA or an

Archer MSA.

Election for decedent's expenses. Medical expenses

not paid before death are liabilities of the estate and are

shown on the federal estate tax return (Form 706). However, if medical expenses for the decedent are paid out of

the estate during the 1-year period beginning with the day

after death, you can elect to treat all or part of the expenses as paid by the decedent at the time they were incurred.

If you make the election, you can claim all or part of the

expenses on the decedent's income tax return (if deductions are itemized) rather than on the federal estate tax return (Form 706). You can deduct expenses incurred in the

year of death on the final income tax return. You should file

an amended return (Form 1040-X) for medical expenses

incurred in an earlier year, unless the statutory period for

filing a claim for that year has expired.

The amount you can deduct on the income tax return is

the amount above 7.5% of AGI. Amounts not deductible

because of this percentage can't be claimed on the federal estate tax return.

Publication 559 (2025)

Making the election. You make the election by attaching a statement, in duplicate, to the decedent's income tax return or amended return. The statement must

state that you haven't claimed the amount as an estate tax

deduction, and that the estate waives the right to claim the

amount as a deduction. This election applies only to expenses incurred for the decedent, not to expenses incurred to provide medical care for dependents.

Example. R. Brown used the cash method of accounting and filed their income tax return on a calendar year basis. R. Brown died on June 1, 2025, at the age of 78, after

incurring $800 in medical expenses. Of that amount, $500

was incurred in 2024 and $300 was incurred in 2025. R.

Brown itemized the deductions when the 2024 income tax

return was filed. The personal representative of the estate

paid the entire $800 liability in August 2025.

The personal representative may file an amended return (Form 1040-X) for 2024 claiming the $500 medical

expense as a deduction, subject to the 7.5% limit. The

$300 of expenses incurred in 2025 can be deducted on

the final income tax return if deductions are itemized, subject to the 7.5% limit. The personal representative must

file a statement in duplicate with each return stating that

these amounts have not been claimed on the federal estate tax return (Form 706), and waiving the right to claim

such a deduction on Form 706 in the future.

Medical expenses not paid by estate. If you paid medical expenses for your deceased spouse or dependent,

claim the expenses on your tax return for the year in which

you paid them, whether they are paid before or after the

decedent's death. If the decedent was a child of divorced

or separated parents, the medical expenses can usually

be claimed by both the custodial parent and the noncustodial parent to the extent paid by that parent during the

year.

Insurance reimbursements. Insurance reimbursements

of previously deducted medical expenses due a decedent

at the time of death and later received by the decedent's

estate are includible in the income tax return of the estate

(Form 1041) for the year the reimbursements are received. The reimbursements are also includible in the decedent's gross estate.

Caution: No deduction for funeral expenses can be

taken on the final Form 1040 or 1040-SR of a decedent.

These expenses may be deductible for estate tax purposes on Form 706.

Deduction for Losses

A decedent's NOL deduction from a prior year and any

capital losses (including capital loss carryovers) can be

deducted only on the decedent's final income tax return.

See Pub. 536. You can't deduct any unused NOL or capital loss on the estate's income tax return.

Note: Generally, an NOL arising in a tax year beginning in 2021 or later may not be carried back and instead

must be carried forward indefinitely. However, farming

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losses arising in tax years beginning in 2021 or later may

be carried back 2 years and carried forward indefinitely.

At-risk loss limits. Special at-risk rules apply to most activities that are engaged in as a trade or business or for

the production of income.

These rules limit the deductible loss to the amount for

which the individual was considered at-risk in the activity.

An individual will generally be considered at-risk to the extent of the money and the adjusted basis of property that

are contributed to the activity and certain borrowed

amounts for use in the activity. An individual will be considered at-risk for amounts borrowed only if the individual

was personally liable for the repayment or if the amounts

borrowed were secured by property other than that used

in the activity. The individual isn't considered at-risk for

borrowed amounts if the lender has an interest (other than

as a creditor) in the activity or if the lender is related to a

person (other than the taxpayer) who has an interest in the

activity. For more information, see Pub. 925, Passive Activity and At-Risk Rules.

Passive activity rules. A passive activity is any trade or

business activity in which the taxpayer doesn't materially

participate. To determine material participation, see Pub.

925. Rental activities are passive activities regardless of

the taxpayer's participation, unless the taxpayer meets

certain eligibility requirements.

Individuals, estates, and trusts can offset passive activity losses only against passive activity income. Passive

activity losses or credits not allowed in 1 tax year can be

carried forward to the next year.

If a passive activity interest is transferred because a

taxpayer dies, the accumulated unused passive activity

losses are allowed as a deduction against the decedent's

income in the year of death. Losses are allowed only to

the extent they are greater than the excess of the transferee's (recipient of the interest transferred) basis in the property over the decedent's adjusted basis in the property immediately before death. The part of the accumulated

losses equal to the excess isn't allowed as a deduction for

any tax year.

Use Form 8582, Passive Activity Loss Limitations, to

summarize losses and income from passive activities and

to figure the amounts allowed. For more information, see

Pub. 925.

Credits, Other Taxes, and Payments

Discussed below are some of the tax credits, types of

taxes that may be owed, income tax withheld, and estimated tax payments reported on the final return of a decedent.

Credits

On the final income tax return, you can claim any tax credits that applied to the decedent before death. Some of

these credits are discussed next.

Earned income credit. If the decedent was an eligible

individual, you can claim the earned income credit on the

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decedent's final return even though the return covers less

than 12 months. If the allowable credit is more than the tax

liability for the year, the excess is refunded.

For more information, see Pub. 596, Earned Income

Credit (EIC).

Credit for the elderly or the disabled. This credit is allowable on a decedent's final income tax return if the decedent met both of the following requirements in the year

of death.

• The decedent was a “qualified individual.”

• The decedent had income (AGI and nontaxable social

security and pensions) less than certain limits.

For details on qualifying for or figuring the credit, see

Pub. 524, Credit for the Elderly or the Disabled.

Child tax credit. If the decedent had a qualifying child,

you may be able to claim the child tax credit on the decedent's final return even though the return covers less than

12 months. You may be able to claim the additional child

tax credit and get a refund if the credit is more than the decedent's liability. For more information, see the Instructions for Form 1040.

Adoption credit. Depending upon when the adoption

was finalized, this credit may be taken on a decedent's final income tax return if either of the following applies.

• The decedent adopted an eligible child and paid qualified adoption expenses.

• The decedent has a carryforward of an adoption credit

from a prior year.

Also, if the decedent is survived by a spouse who

meets the filing status of qualifying surviving spouse, unused adoption credit may be carried forward and used following the death of the decedent. See Form 8839, Qualified Adoption Expenses, and its instructions for more

details.

1. Net earnings from self-employment (excluding income

described in (2)) were $400 or more.

2. Wages from services performed as a church employee were $108.28 or more.

Alternative minimum tax (AMT). The tax laws give special treatment to certain types of income and allow special

deductions and credits for certain types of expenses. The

AMT was enacted so taxpayers who benefit from these

laws still pay at least a minimum amount of tax. In general,

the AMT is the excess of the tentative minimum tax over

the regular tax shown on the return.

Form 6251. Use Form 6251, Alternative Minimum

Tax—Individuals, to determine if this tax applies to the decedent. See the form instructions for information on when

you must attach Form 6251 to Form 1040 or 1040-SR.

Form 8801. If the decedent paid AMT in a previous

year or had a credit carryforward, the decedent may be eligible for a minimum tax credit. See Form 8801, Credit for

Prior Year Minimum Tax—Individuals, Estates, and Trusts.

Payments of Tax

The income tax withheld from the decedent's salary, wages, pensions, or annuities, and the amount paid as estimated tax are credits (advance payments of tax) that must

be claimed on the final return.

Tax Forgiveness for Armed Forces

Members, Victims of Terrorism, and

Astronauts

Income tax liability may be forgiven for a decedent who

dies due to service in a combat zone, due to military or

terrorist actions, as a result of a terrorist attack, or while

serving in the line of duty as an astronaut.

General business tax credit. The general business

credit available to a taxpayer is limited. Any unused credit

arising in a tax year beginning after 1997 has a 1-year carryback and a 20-year carryforward period.

After the carryforward period, a deduction may be allowed for any unused business credit. If the taxpayer dies

before the end of the carryforward period, the deduction is

generally allowed in the year of death.

For more information on the general business credit,

see Pub. 334, Tax Guide for Small Business.

Combat Zone

Other Taxes

If the tax (including interest, additions to the tax, and

additional amounts) for these years has been assessed,

the assessment will be forgiven. If the tax has been collected (regardless of the date of collection), that tax will be

credited or refunded.

Taxes other than income tax that may be owed on the final

return of a decedent include self-employment tax and alternative minimum tax, which are reported on Form 1040

or 1040-SR.

Self-employment tax. Self-employment tax may be

owed on the final return if either of the following applied to

the decedent in the year of death.

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If a member of the Armed Forces of the United States dies

while in active service in a combat zone or from wounds,

disease, or injury incurred in a combat zone, the decedent's income tax liability is abated (forgiven) for the entire

year in which death occurred and for any prior tax year

ending on or after the first day the person served in a combat zone in active service. For this purpose, a qualified

hazardous duty area is treated as a combat zone.

Any of the decedent's income tax for tax years before

those mentioned above that remains unpaid as of the actual (or presumptive) date of death won't be assessed. If

any unpaid tax (including interest, additions to the tax, and

additional amounts) has been assessed, this assessment

Publication 559 (2025)

will be forgiven. Also, if any tax was collected after the

date of death, that amount will be credited or refunded.

The date of death of a member of the Armed Forces reported as missing in action or as a prisoner of war is the

date the member’s name is removed from missing status

for military pay purposes. This is true even if death actually

occurred earlier.

For other tax information for members of the Armed

Forces, see Pub. 3, Armed Forces' Tax Guide.

Military or Terrorist Actions

The decedent's income tax liability is forgiven if, at death,

the decedent was a military or civilian employee of the

United States who died because of wounds or injury incurred:

• While a U.S. employee, and

• In a military or terrorist action.

The forgiveness applies to the tax year in which death

occurred and for any earlier tax year, beginning with the

year before the year in which the wounds or injury occurred.

Example. The income tax liability of a civilian employee of the United States who died in 2025 because of

wounds incurred while a U.S. employee in a terrorist attack that occurred in 2019 will be forgiven for 2025 and for

all prior tax years in the period 2018 through 2024. Refunds are allowed for the tax years for which the period for

filing a claim for refund hasn't ended, as discussed later.

Military or terrorist action defined. A military or terrorist action means the following.

• Any terrorist activity that most of the evidence indi-

cates was directed against the United States or any of

its allies.

• Any military action involving the U.S. Armed Forces

and resulting from violence or aggression against the

United States or any of its allies, or the threat of such

violence or aggression.

Terrorist activity includes criminal offenses intended to

coerce, intimidate, or retaliate against the government or

civilian population. Military action doesn't include training

exercises. Any multinational force in which the United

States is participating is treated as an ally of the United

States.

Determining if a terrorist activity or military action

has occurred. You may rely on published guidance from

the IRS to determine if a particular event is considered a

terrorist activity or military action.

Specified Terrorist Victim

The Victims of Terrorism Tax Relief Act of 2001 (the Act)

provides tax relief for those injured or killed as a result of

terrorist attacks, certain survivors of those killed as a result of terrorist attacks, and others who were affected by

Publication 559 (2025)

terrorist attacks. Under the Act, the federal income tax liability of those killed in the following attacks (specified terrorist victim) is forgiven for certain tax years.

• The April 19, 1995, terrorist attack on the Alfred P.

Murrah Federal Building (Oklahoma City).

• The September 11, 2001, terrorist attacks.

• The terrorist attacks involving anthrax occurring after

September 10, 2001, and before January 1, 2002.

The Act also exempts from federal income tax the following types of income.

• Qualified disaster relief payments made after September 10, 2001, to cover personal, family, living, or funeral expenses incurred because of a terrorist attack.

• Certain disability payments (including Social Security

Disability Insurance (SSDI) payments) received in tax

years ending after September 10, 2001, for injuries

sustained in a terrorist attack.

• Certain death benefits paid by an employer to the sur-

vivor of an employee because the employee died as a

result of a terrorist attack.

• Payments from the September 11th Victim Compensation Fund 2001.

The Act also reduces the estate tax of individuals who

die as a result of a terrorist attack. See Pub. 3920, Tax

Relief for Victims of Terrorist Attacks for more information.

Astronauts

Legislation extended the tax relief available under the Victims of Terrorism Tax Relief Act of 2001 (the Act) to astronauts who died in the line of duty after December 31,

2002. The decedent's income tax liability is forgiven for

the tax year in which death occurs, and for the tax year

prior to death. For information on death benefit payments

and the reduction of federal estate taxes, see Pub. 3920.

However, the discussions in that publication under Death

Benefits and Estate Tax Reduction should be modified for

astronauts (for example, by using the date of death of the

astronaut instead of September 11, 2001).

For more information on the Act, see Pub. 3920.

Claim for Credit or Refund

If any of these tax-forgiveness situations applies to a prior

year tax, any tax paid for which the period for filing a claim

hasn't ended will be credited or refunded. If any tax is still

due, it will be canceled. The normal period for filing a

claim for credit or refund is 3 years after the return was

filed or 2 years after the tax was paid, whichever is later.

If death occurred in a combat zone or from wounds,

disease, or injury incurred in a combat zone, the period for

filing the claim is extended by:

1. The amount of time served in the combat zone (including any period in which the individual was in

missing status), plus

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2. The period of continuous qualified hospitalization for

injury from service in the combat zone, if any, plus

3. The next 180 days.

Qualified hospitalization means any hospitalization outside the United States and any hospitalization in the United States of not more than 5 years.

This extended period for filing the claim also applies to

a member of the Armed Forces who was deployed outside

the United States in a designated contingency operation.

Filing a claim. Use the following procedures to file a

claim.

• If a U.S. individual income tax return (Form 1040 or

1040-SR) hasn't been filed, you should make a claim

for refund of any withheld income tax or estimated tax

payments by filing Form 1040 or 1040-SR. Form W-2

must accompany all returns.

• If a U.S. individual income tax return has been filed,

you should make a claim for refund by filing Form

1040-X. You must file a separate Form 1040-X for

each year in question.

You must file these returns and claims at the following

address for regular mail (U.S. Postal Service).

Internal Revenue Service

333 W. Pershing, Stop 6503, P5

Kansas City, MO 64108

Identify all returns and claims for refund by writing “Iraqi

Freedom—KIA,” “Enduring Freedom—KIA,” “Kosovo Operation—KIA,” “Desert Storm—KIA,” or “Former Yugoslavia—KIA” in bold letters on the top of page 1 of the return

or claim. On the applicable return, write the same phrase

on the line for total tax. If the individual was killed in a terrorist or military action, put “KITA” on the front of the return

and on the line for total tax.

Include an attachment showing the computation of the

decedent's tax liability and a computation of the amount to

be forgiven. On joint returns, make an allocation of the tax

as described later under Joint returns. If you can't make a

proper allocation, attach a statement of all income and deductions allocable to each spouse and the IRS will make

the proper allocation.

You must attach Form 1310 to all returns and claims for

refund. However, for exceptions to filing Form 1310, see

Form 1310, Statement of Person Claiming Refund Due a

Deceased Taxpayer, under Refund, earlier.

You must also attach proof of death that includes a

statement that the individual was a U.S. employee on the

date of injury and on the date of death and died as the result of a military or terrorist action. For military and civilian

employees of the Department of Defense, attach DD Form

1300, Report of Casualty. For other U.S. civilian employees killed in the United States, attach a death certificate

and a certification (letter) from the federal employer. For

other U.S. civilian employees killed overseas, attach a certification from the Department of State.

If you don't have enough tax information to file a timely

claim for refund, you can suspend the period for filing a

12

claim by filing Form 1040-X. Attach Form 1310, any required documentation currently available, and a statement

that you will file an amended claim as soon as you have

the required tax information.

Joint returns. If a joint return was filed, only the decedent's part of the income tax liability is eligible for forgiveness. Determine the decedent's tax liability as follows.

1. Figure the income tax for which the decedent would

have been liable if a separate return had been filed.

2. Figure the income tax for which the spouse would

have been liable if a separate return had been filed.

3. Multiply the joint tax liability by a fraction. The numerator of the fraction is the amount in (1) above. The denominator of the fraction is the total of (1) and (2).

The resulting amount from (3) above is the decedent's

tax liability eligible for forgiveness. See also Worksheet B

in Pub. 3920.

Filing Reminders

To minimize the time needed to process the decedent's final return and issue any refund, be sure to follow these

procedures.

1. Write “DECEASED,” the decedent's name, and the

date of death across the top of the tax return.

2. If a personal representative has been appointed, the

personal representative must sign the return. If it is a

joint return, the surviving spouse must also sign it.

3. If you are the decedent's spouse filing a joint return

with the decedent and no personal representative has

been appointed, write “Filing as surviving spouse” in

the area where you sign the return.

4. If no personal representative has been appointed and

if there is no surviving spouse, the person in charge of

the decedent's property must file and sign the return

as “personal representative.”

5. To claim a refund for the decedent, do the following.

a. If you are the decedent's spouse filing a joint return with the decedent, file only the tax return to

claim the refund.

b. If you are the personal representative and the return isn't a joint return filed with the decedent's

surviving spouse, file the return and attach a copy

of the certificate that shows your appointment by

the court. (A power of attorney or a copy of the decedent's will isn't acceptable evidence of your appointment as the personal representative.) If you

are filing an amended return, attach Form 1310

and a copy of the certificate of appointment (or, if

you have already sent the certificate of appointment to the IRS, write “Certificate Previously Filed”

at the bottom of Form 1310).

Publication 559 (2025)

c. If you aren't filing a joint return as the surviving

spouse and a personal representative hasn't been

appointed, file the return and attach Form 1310.

Other Tax Information

Discussed below is information about the effect of an individual's death on the income tax liability of the survivors

(including the surviving spouse), the beneficiaries, and the

estate.

Tax Benefits for Survivors

Survivors can qualify for certain benefits when filing their

own income tax returns.

Joint return by surviving spouse. A surviving spouse

can file a joint return for the year of death and may qualify

for special tax rates for the following 2 years, as explained

under Qualifying surviving spouse, later.

Decedent as your dependent. If the decedent qualified

as your dependent for a part of the year before death, you

can claim the dependent on your tax return, regardless of

when death occurred during the year.

If the decedent was your qualifying child, you may be

able to claim the child tax credit or the earned income

credit. To determine if you qualify for the child tax credit,

see the Instructions for Form 1040 (and 1040-SR), line 19;

or Form 1040-NR, line 19. To determine if you qualify for

the earned income credit, see the instructions for Form

1040 and 1040-SR, line 27.

Qualifying surviving spouse. If your spouse died within

the 2 tax years preceding the year for which your return is

being filed, you may be eligible to claim the filing status of

qualifying surviving spouse with dependent child and

qualify to use the married-filing-jointly tax rates.

Requirements. Generally, you qualify for this special

benefit if you meet all of the following requirements.

• You were entitled to file a joint return with your spouse

for the year of death—whether or not you actually filed

jointly.

• You didn't remarry before the end of the current tax

year.

• You have a child, stepchild, or foster child who qualifies as your dependent for the tax year.

• You provide more than half the cost of maintaining

your home, which is the principal residence of that

child for the entire year except for temporary absences.

Example. Skyler’s spouse, Cameron, died in 2023.

Skyler hasn't remarried and continued throughout 2024

and 2025 to maintain a home for self and dependent child.

For 2023, Skyler was entitled to file a joint return with Cameron. For 2024 and 2025, Skyler qualifies to file as a

Publication 559 (2025)

qualifying surviving spouse with dependent child. For later

years, Skyler may qualify to file as head of household.

Figuring your tax. Check the qualifying surviving

spouse box on the top of your Form 1040 or 1040-SR tax

return. In the Instructions for Form 1040 (and 1040-SR),

use the married filing jointly column in the Tax Table.

The last year you can file jointly with your deceased

spouse is the year of death.

Joint return filing rules. If you are the surviving spouse

and a personal representative is handling the estate for

the decedent, you should coordinate filing your return for

the year of death with this personal representative. See

Joint Return under Final Income Tax Return for Decedent—Form 1040 or 1040-SR, earlier.

Income in Respect of a Decedent

All income the decedent would have received had death

not occurred that wasn't properly includible on the final return, discussed earlier, is income in respect of a decedent.

Caution: If the decedent is a specified terrorist victim

(see Specified Terrorist Victim, earlier), income received

after the date of death and before the end of the decedent's tax year (determined without regard to death) is excluded from the recipient's gross income. This exclusion

doesn't apply to certain income. For more information, see

Pub. 3920.

How To Report

Income in respect of a decedent must be included in the

income of one of the following.

• The decedent's estate, if the estate receives it.

• The beneficiary, if the right to income is passed di-

rectly to the beneficiary and the beneficiary receives it.

• Any person to whom the estate properly distributes

the right to receive it.

Tip: If you have to include income in respect of a decedent in your gross income and an estate tax return (Form

706) was filed for the decedent, you may be able to claim

a deduction for the estate tax paid on that income. See

Estate Tax Deduction, later.

Example 1. F. Johnson owned and operated an apple

orchard and used the cash method of accounting. F. Johnson sold and delivered 1,000 bushels of apples to a canning factory for $2,000, but didn't receive payment before

death. The proceeds from the sale are income in respect

of a decedent. When the estate was settled, payment had

not been made and the estate transferred the right to the

payment to F. Johnson’s surviving spouse. When the surviving spouse collects the $2,000, that amount must be included in the surviving spouse’s return. It isn't reported on

the final return of the decedent or on the return of the estate.

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Example 2. Assume the same facts as in Example 1,

except that F. Johnson used the accrual method of accounting. The amount accrued from the sale of the apples

would be included on F. Johnson’s final return. Neither the

estate nor the surviving spouse would realize income in

respect of a decedent when the money is later paid.

Example 3. On February 1, G. High, a cash method

taxpayer sold a tractor for $3,000, payable March 1 of the

same year. G. High’s adjusted basis in the tractor was

$2,000. G. High died on February 15, before receiving

payment. The gain to be reported as income in respect of

a decedent is the $1,000 difference between the decedent's basis in the property and the sale proceeds. In

other words, the income in respect of a decedent is the

gain the decedent would have realized had the decedent

lived.

Example 4. C. O’Neil was entitled to a large salary

payment at the date of death. The amount was to be paid

in five annual installments. The estate, after collecting two

installments, distributed the right to the remaining installments to you, the beneficiary. The payments are income in

respect of a decedent. None of the payments were includible on C. O’Neil’s final return. The estate must include in

its income the two installments it received, and you must

include in your income each of the three installments as

you receive them.

Example 5. Danny inherited the right to receive renewal commissions on life insurance sold by Danny’s parent, Taylor, before Taylor’s death. Danny inherited the

right from Danny’s other parent, Charlie, who acquired it

by bequest from Taylor. Charlie died before receiving all

the commissions Charlie had the right to receive, so

Danny received the rest. The commissions are income in

respect of a decedent. None of these commissions were

includible in Taylor’s final return. The commissions received by Charlie were included in Charlie’s income. The

commissions Danny received aren't includible in Charlie’s

income, even on Charlie’s final return. Danny must include

them in Danny’s income.

Character of income. The character of the income you

receive in respect of a decedent remains the same as it

would have been to the decedent if the decedent were

alive. If the income would have been a capital gain to the

decedent, it will be a capital gain to you.

Transfer of right to income. If you transfer your right to

income in respect of a decedent, you must include in your

income the greater of:

• The amount you receive for the right, or

• The FMV of the right you transfer.

If you make a gift of such a right, you must include in

your income the FMV of the right at the time of the gift.

If the right to income from an installment obligation is

transferred, the amount you must include in income is reduced by the basis of the obligation. See Installment obligations, later.

14

Transfer defined. A transfer for this purpose includes

a sale, exchange, or other disposition, the satisfaction of

an installment obligation at other than face value, or the

cancellation of an installment obligation.

Installment obligations. If the decedent sold property

using the installment method and you are collecting payments on an installment obligation acquired from the decedent, use the same gross profit percentage the decedent used to figure the part of each payment that

represents profit. Include in your income the same profit

the decedent would have included had death not occurred. For more information, see Pub. 537, Installment

Sales.

If you dispose of an installment obligation acquired

from a decedent (other than by transfer to the obligor), the

rules explained in Pub. 537 for figuring gain or loss on the

disposition apply to you.

Transfer to obligor. A transfer of a right to income,

discussed earlier, has occurred if the decedent (seller)

sold property using the installment method and the installment obligation was transferred to the obligor (buyer or

person legally obligated to pay the installments). A transfer also occurs if the obligation was canceled either at

death or by the estate or person receiving the obligation

from the decedent. An obligation that becomes unenforceable is treated as having been canceled.

If such a transfer occurs, the amount included in the income of the transferor (the estate or beneficiary) is the

greater of the amount received or the FMV of the installment obligation at the time of transfer, reduced by the basis of the obligation. The basis of the obligation is the decedent's basis, adjusted for all installment payments

received after the decedent's death and before the transfer.

If the decedent and obligor were related persons, the

FMV of the obligation can't be less than its face value.

Specific Types of Income in Respect of a

Decedent

This section explains and provides examples of some

specific types of income in respect of a decedent.

Wages. The entire amount of wages or other employee

compensation earned by the decedent but unpaid at the

time of death is income in respect of a decedent. The income isn't reduced by any amounts withheld by the employer. If the income is $600 or more, the employer should

report it in box 3 of Form 1099-MISC, Miscellaneous Income, and give the recipient a copy of the form or a similar

statement.

Wages paid as income in respect of a decedent aren't

subject to federal income tax withholding. However, if paid

during the calendar year of death, they are subject to withholding for social security and Medicare taxes. These

taxes should be included on the decedent's Form W-2

along with the taxes withheld before death. These wages

aren't included in box 1 of Form W-2.

Publication 559 (2025)

Wages paid as income in respect of a decedent after

the year of death aren’t generally subject to withholding for

any federal taxes.

Farm income from crops, crop shares, and livestock.

A farmer's growing crops and livestock at the date of

death wouldn’t normally give rise to income in respect of a

decedent or income to be included in the final return.

However, when a cash method farmer receives rent in the

form of crop shares or livestock and owns the crop shares

or livestock at the time of death, the rent is income in respect of a decedent and is reported in the year in which

the crop shares or livestock are sold or otherwise disposed of. The same treatment applies to crop shares or

livestock that the decedent had a right to receive as rent at

the time of death for economic activities that occurred before death.

If the individual died during a rental period, only the net

proceeds from the part of the rental period ending on the

date of death are income in respect of a decedent. The

proceeds from the rental period from the day after death to

the end of the rental period are ordinary income to the estate. Cash rent or crop shares and livestock received as

rent and reduced to cash by the decedent are includible

on the final return even though the rental period didn't end

until after death.

Example. A. Roberts, who used the cash method of

accounting, leased part of the farm for a 1-year period beginning March 1. The rental was one-third of the crop, payable in cash when the crop share is sold at the direction of

A. Roberts. A. Roberts died on June 30 and was alive during 122 days of the rental period. Seven months later, A.

Roberts’ personal representative ordered the crop to be

sold and was paid $1,500. Of the $1,500, 122/365, or

$501, is income in respect of a decedent. The balance of

the $1,500 received by the estate, $999, is income to the

estate.

Partnership income. If the decedent had been receiving

payments representing a distributive share or guaranteed

payment in liquidation of the decedent’s interest in a partnership, the remaining payments made to the estate or

other successor in interest are income in respect of a decedent. The estate or the successor receiving the payments must include them in income when received. Similarly, the estate or other successor in interest receives

income in respect of a decedent if amounts are paid by a

third person in exchange for the successor's right to the

future payments.

For a discussion of partnership rules, see Pub. 541,

Partnerships.

U.S. savings bonds acquired from decedent. If series

EE or series I U.S. savings bonds, owned by a cash

method taxpayer who reported the interest each year, or

by an accrual method taxpayer, are transferred because of

death, the increase in value of the bonds (interest earned)

in the year of death up to the date of death must be reported on the decedent's final return. The transferee (estate

or beneficiary) reports on its return only the interest

earned after the date of death.

Publication 559 (2025)

The redemption values of U.S. savings bonds are generally available from local banks, credit unions, savings

and loan institutions, or your nearest Federal Reserve

Bank.

You can also get information by writing to the following

address.

Series EE and Series I

Treasury Retail Securities Services

P.O. Box 9150

Minneapolis, MN 55480-9150

Or go to TreasuryDirect.gov.

If the bonds transferred because of death were owned

by a cash method taxpayer who chose not to report the interest each year and had purchased the bonds entirely

with personal funds, interest earned before death must be

reported in one of the following ways.

1. The person (executor, administrator, etc.) who is required to file the decedent's final income tax return

can elect to include all of the interest earned on the

bonds before the decedent's death on the return. The

transferee (estate or beneficiary) then includes only

the interest earned after the date of death on its return.

2. If the election in (1) above wasn't made, the interest

earned to the date of death is income in respect of the

decedent and isn't included on the decedent's final return. In this case, all of the interest earned before and

after the decedent's death is income to the transferee

(estate or beneficiary). A transferee who uses the

cash method of accounting and who has chosen not

to report the interest annually may defer reporting any

of it as income until the bonds are either cashed or

reach the date of maturity, whichever is earlier. In the

year the interest is reported, the transferee may claim

a deduction for any federal estate tax paid that arose

because of the part of interest (if any) included in the

decedent's estate.

Example 1. Your relative, Drew, a cash method taxpayer, died and left you a $1,000 series EE bond. Drew

bought the bond for $500 and had not chosen to report

the increase in value each year. At the date of death, interest of $94 had accrued on the bond, and its value of $594

at date of death was included in Drew's estate. Drew's

personal representative didn't choose to include the $94

accrued interest on the decedent's final income tax return.

You are a cash method taxpayer and don't choose to report the increase in value each year as it is earned. Assuming you cash it when it reaches maturity value of

$1,000, you would report $500 interest income (the difference between maturity value of $1,000 and the original

cost of $500) in that year. You are also entitled to claim, in

that year, a deduction for any federal estate tax resulting

from the inclusion in Drew’s estate of the $94 increase in

value.

Example 2. If, in Example 1, the personal representative had chosen to include the $94 interest earned on the

bond before death in the final income tax return for Drew,

15

you would report $406 ($500 − $94) as interest when you

cashed the bond at maturity. This $406 represents the interest earned after Drew's death and wasn't included in

Drew’s estate, so no deduction for federal estate tax is allowable for this amount.

Example 3. Drew died owning series HH bonds Drew

acquired in exchange for series EE bonds. You were the

beneficiary of these bonds. Drew used the cash method of

accounting and had not chosen to report the increase in

redemption price of the series EE bonds each year as it

accrued. Drew's personal representative made no election

to include any interest earned before death on the decedent's final return. Your income in respect of the decedent

is the sum of the unreported increase in value of the series

EE bonds, which constituted part of the amount paid for

the series HH bonds, and the interest, if any, payable on

the series HH bonds but not received as of the date of the

decedent's death.

Specific dollar amount legacy satisfied by transfer

of bonds. If a beneficiary receives series EE or series I

bonds from an estate in satisfaction of a specific dollar

amount legacy and the decedent was a cash method taxpayer who didn't elect to report interest each year, only the

interest earned after receipt of the bonds is income to the

beneficiary. The interest earned to the date of death plus

any further interest earned to the date of distribution is income to (and reportable by) the estate.

Cashing U.S. savings bonds. When you cash a U.S.

savings bond that you acquired from a decedent, the bank

or other payer that redeems it must give you a Form

1099-INT if the interest part of the payment you receive is

$10 or more. Your Form 1099-INT should show the difference between the amount received and the cost of the

bond. The interest shown on your Form 1099-INT won't be

reduced by any interest reported by the decedent before

death, or, if elected, by the personal representative on the

final income tax return of the decedent, or by the estate on

the estate's income tax return. Your Form 1099-INT may

show more interest than you must include in your income.

You must make an adjustment on your tax return to report the correct amount of interest. Report the total interest shown on Form 1099-INT on your Schedule B (Form

1040). Enter a subtotal of the interest shown on Forms

1099, and the interest reportable from other sources for

which you didn't receive Forms 1099. Show the total interest that was previously reported and subtract it from the

subtotal. Identify this adjustment as “U.S. Savings Bond

Interest Previously Reported.”

Interest accrued on U.S. Treasury bonds. The interest

accrued on U.S. Treasury bonds owned by a cash method

taxpayer and redeemable for the payment of federal estate taxes that wasn't received as of the date of the individual's death is income in respect of a decedent. This interest isn't included in the decedent's final income tax return.

The estate will treat such interest as taxable income in the

tax year received if it chooses to redeem the U.S. Treasury

bonds to pay federal estate taxes. If the person entitled to

the bonds (by bequest, devise, or inheritance, or because

16

of the death of the individual) receives them, that person

will treat the accrued interest as taxable income in the

year the interest is received. Interest that accrues on the

U.S. Treasury bonds after the owner's death doesn't represent income in respect of a decedent. The interest, however, is taxable income and must be included in the income of the respective recipients.

Interest accrued on savings certificates. The interest

accrued on savings certificates (redeemable after death

without forfeiture of interest) for the period from the date of

the last interest payment and ending with the date of the

decedent's death, but not received as of that date, is income in respect of a decedent. Interest accrued after the

decedent's death that becomes payable on the certificates after death isn't income in respect of a decedent,

but is taxable income includible in the income of the respective recipients.

Inherited individual retirement arrangements (IRAs).

If a beneficiary receives a lump-sum distribution from a

traditional IRA the beneficiary inherited, all or some of it

may be taxable. The distribution is taxable in the year received as income in respect of a decedent up to the decedent's taxable balance. This is the decedent's balance at

the time of death, including unrealized appreciation and

income accrued to date of death, minus any basis (nondeductible contributions). Amounts distributed that are more

than the decedent's entire IRA balance (includes taxable

and nontaxable amounts) at the time of death are the income of the beneficiary.

If the beneficiary of a traditional IRA is the decedent's

surviving spouse who properly rolls over the distribution

into another traditional IRA, the distribution isn't currently

taxed. A surviving spouse can also roll over tax free the

taxable part of the distribution into a qualified plan, section

403 annuity, or section 457 plan.

For more information on inherited IRAs, see Pub.

590-B, Distributions from Individual Retirement Arrangements (IRAs).

Roth IRAs. Qualified distributions from a Roth IRA aren't

subject to tax. A distribution made to a beneficiary or to

the Roth IRA owner's estate on or after the date of death

is a qualified distribution if it is made after the 5-tax-year

period beginning with the first tax year in which a contribution was made to any Roth IRA of the owner.

Generally, the entire interest in the Roth IRA must be

distributed by the end of the fifth calendar year after the

year of the owner's death unless the interest is payable to

a designated beneficiary over the beneficiary’s life or life

expectancy. If paid as an annuity, the distributions must

begin before the end of the calendar year following the

year of death. If the sole beneficiary is the decedent's

spouse, the spouse can delay the distributions until the

decedent would have reached the applicable age or can

treat the Roth IRA as the spouse’s own Roth IRA.

The part of any distribution made to a beneficiary that

isn't a qualified distribution may be includible in the beneficiary's income. Generally, the part includible is the earnings in the Roth IRA. Earnings attributable to the period

ending with the decedent's date of death are income in

Publication 559 (2025)

respect of a decedent. Additional earnings are the income

of the beneficiary.

For more information on Roth IRAs, see Pub. 590-A,

Contributions to Individual Retirement Arrangements

(IRAs), and Pub. 590-B.

Coverdell ESA. Generally, the balance in a Coverdell

ESA must be distributed within 30 days after the individual

for whom the account was established reaches age 30 or

dies, whichever is earlier. The treatment of the Coverdell

ESA at the death of an individual under age 30 depends

on who acquires the interest in the account. If the decedent's estate acquires the interest, see the discussion under Final Income Tax Return for Decedent—Form 1040 or

1040-SR, earlier.

Caution: The age 30 limitation doesn't apply if the individual for whom the account was established or the beneficiary that acquires the account is an individual with special needs. This includes an individual who, because of a

physical, mental, or emotional condition (including a learning disability), requires additional time to complete the individual’s education.

If the decedent's spouse or other family member is the

designated beneficiary of the decedent's account, the

Coverdell ESA becomes that person's Coverdell ESA. It is

subject to the rules discussed in Pub. 970.

Any other beneficiary (including a spouse or family

member who isn't the designated beneficiary) must include in income the earnings portion of the distribution.

Any balance remaining at the close of the 30-day period is

deemed to be distributed at that time. The amount included in income is reduced by any qualified education expenses of the decedent that are paid by the beneficiary

within 1 year after the decedent's date of death. An estate

tax deduction, discussed later, applies to the amount included in income by a beneficiary other than the decedent's spouse or family member.

HSA, Archer MSA, or Medicare Advantage MSA. The

treatment of an HSA, an Archer MSA, or a Medicare Advantage MSA at the death of the account holder depends

on who acquires the interest in the account. If the decedent's estate acquired the interest, see the discussion under Final Income Tax Return for Decedent—Form 1040 or

1040-SR, earlier.

If the decedent's spouse is the designated beneficiary

of the account, the account becomes that spouse's Archer

MSA. It is subject to the rules discussed in Pub. 969.

Any other beneficiary (including a spouse that isn't the

designated beneficiary) must include in income the FMV

of the assets in the account on the decedent's date of

death. This amount must be reported for the beneficiary's

tax year that includes the decedent's date of death. The

amount included in income is reduced by any qualified

medical expenses for the decedent paid by the beneficiary

within 1 year after the decedent's date of death. An estate

tax deduction, discussed later, applies to the amount included in income by a beneficiary other than the decedent's spouse.

Deductions in Respect of a Decedent

Items such as business expenses, income-producing expenses, interest, and taxes, for which the decedent was liable but that aren't properly allowable as deductions on

the decedent's final income tax return will be allowed as a

deduction to one of the following when paid.

• The estate.

• The person who acquired an interest in the decedent's

property (subject to such obligations) because of the

decedent's death, if the estate wasn't liable for the obligation.

Note: Similar treatment is given to the foreign tax

credit. A beneficiary who must pay a foreign tax on income

in respect of a decedent will be entitled to claim the foreign tax credit.

Depletion. The deduction for percentage depletion is allowable only to the person (estate or beneficiary) who receives income in respect of a decedent to which the deduction relates, whether or not that person receives the

property from which the income is derived. An heir who

(because of the decedent's death) receives income as a

result of the sale of units of mineral by the decedent (who

used the cash method) will be entitled to the depletion allowance for that income. If the decedent had not figured

the deduction on the basis of percentage depletion, any

depletion deduction to which the decedent was entitled at

the time of death is allowable on the decedent's final return, and no depletion deduction in respect of a decedent

is allowed to anyone else.

For more information about depletion, see chapter 9 in

Pub. 535, Business Expenses.

Estate Tax Deduction

Income that the decedent had a right to receive is included in the decedent's gross estate and is subject to estate

tax. This income in respect of a decedent is also taxed

when received by the recipient (estate or beneficiary).

However, an income tax deduction is allowed to the recipient for the estate tax paid on the income.

The deduction for estate tax paid can only be claimed

for the same tax year in which the income in respect of a

decedent must be included in the recipient's income. (This

is also true for income in respect of a prior decedent.)

Individuals can claim this deduction only as an itemized

deduction on line 16 of Schedule A (Form 1040). Estates

can claim the deduction on line 19 of Form 1041.

If income in respect of a decedent is capital gain income, you must reduce the gain, but not below zero, by

any deduction for estate tax paid on such gain. This applies in figuring the following.

• The maximum tax on net capital gain (including qualified dividends).

• The exclusion for gain on small business stock under

section 1202.

Publication 559 (2025)

17

• The limitation on capital losses.

$12,000 reported on the estate tax return, use the smaller

amount to figure the estate tax deduction.

Computation

To figure a recipient's estate tax deduction, determine:

• The estate tax that qualifies for the deduction, and

• The recipient's part of the deductible tax.

Deductible estate tax. The estate tax is the tax on the

taxable estate, reduced by any credits allowed. The estate

tax qualifying for the deduction is the part of the net value

of all the items in the estate that represent income in respect of a decedent. Net value is the excess of the items

of income in respect of a decedent over the items of expenses in respect of a decedent. The deductible estate

tax is the difference between the actual estate tax and the

estate tax determined without including net value.

Example 1. J. Sage used the cash method of accounting. At the time of death, J. Sage was entitled to receive

$12,000 from clients for services provided and had accrued bond interest of $8,000, for total income in respect

of a decedent of $20,000. J. Sage also owed $5,000 for

business expenses for which the estate is liable. The income and expenses are reported on J. Sage's estate tax

return.

The tax on J. Sage's estate is $9,460, after credits. The

net value of the items included as income in respect of the

decedent is $15,000 ($20,000 − $5,000). The estate tax

determined without including the $15,000 in the taxable

estate is $4,840, after credits. The estate tax that qualifies

for the deduction is $4,620 ($9,460 − $4,840).

Recipient's deductible part. Figure the recipient's part

of the deductible estate tax by dividing the estate tax

value of the items of income in respect of a decedent included in the recipient's income (the numerator) by the total value of all items included in the estate that represent

income in respect of a decedent (the denominator). If the

amount included in the recipient's income is less than the

estate tax value of the item, use the lesser amount in the

numerator.

Example 2. As the beneficiary of J. Sage's estate (Example 1), you collect the $12,000 accounts receivable

from J. Sage’s clients. You will include the $12,000 in your

income in the tax year you receive it. If you itemize your

deductions in that tax year, you can claim an estate tax

deduction of $2,772 figured as follows:

Value included in your income

Total value of income in respect

of decedent

$12,000

$20,000

X

$4,620

Estate tax qualifying for

deduction

X

=

$2,772

If the amount you collected for the accounts receivable

was more than $12,000, you would still claim $2,772 as an

estate tax deduction because only the $12,000 actually

reported on the estate tax return can be used in the above

computation. However, if you collected less than the

18

Estates. The estate tax deduction allowed to an estate is

figured in the same manner discussed earlier. However,

any income in respect of a decedent received by the estate during the tax year is reduced by any such income

properly paid, credited, or required to be distributed by the

estate to a beneficiary. The beneficiary would include

such distributed income in respect of a decedent for figuring the beneficiary's estate tax deduction.

Surviving annuitants. For the estate tax deduction, an

annuity received by a surviving annuitant under a joint and

survivor annuity contract is considered income in respect

of a decedent. The deceased annuitant must have died after the annuity starting date. You must make a special

computation to figure the estate tax deduction for the surviving annuitant. See Regulations section 1.691(d)-1.

Gifts, Insurance, and Inheritances

Property received as a gift, bequest, or inheritance isn't included in your income. However, if property you receive in

this manner later produces income, such as interest, dividends, or rents, that income is taxable to you. The income

from property donated to a trust that is paid, credited, or

distributed to you is taxable income to you. If the gift, bequest, or inheritance is the income from property, that income is taxable to you.

If you receive property from a decedent's estate in satisfaction of your right to the income of the estate, it is treated as a bequest or inheritance of income from property.

See Distributions to Beneficiaries, later.

Insurance

The proceeds from a decedent's life insurance policy paid

by reason of the decedent’s death are generally excluded

from income. The exclusion applies to any beneficiary,

whether a family member or other individual, a corporation, or a partnership.

Veterans' insurance proceeds. Veterans' insurance

proceeds and dividends aren't taxable either to the veteran or to the beneficiaries.

Interest on dividends left on deposit with the Department of Veterans Affairs isn't taxable.

Life insurance proceeds. Life insurance proceeds paid

to a beneficiary because of the death of the insured (or

because the insured is a member of the U.S. uniformed

services who is missing in action) aren't taxable unless the

policy was turned over to the recipient for a price. This is

true even if the proceeds are paid under an accident or

health insurance policy or an endowment contract. If the

proceeds are received in installments, see the discussion

under Insurance received in installments, later.

Accelerated death benefits. A beneficiary can exclude

from income accelerated death benefits received on the

life of an insured individual if certain requirements are met.

Publication 559 (2025)

Accelerated death benefits are amounts received under a

life insurance contract before the death of the insured.

These benefits also include amounts received on the sale

or assignment of the contract to a viatical settlement provider. This exclusion applies only if the insured was a terminally ill individual or a chronically ill individual. This exclusion doesn't apply if the insured is a director, officer, or

employee, or has a financial interest in any trade or business carried on by the beneficiary.

Terminally ill individual. A terminally ill individual is

one who has been certified by a physician as having an illness or physical condition that can reasonably be expected to result in death in 24 months or less from the date of

certification.

Chronically ill individual. A chronically ill individual is

one who has been certified as one of the following.

• An individual who, for at least 90 days, is unable to

perform at least two activities of daily living without

substantial assistance due to a loss of functional capacity.

• An individual who requires substantial supervision to

be protected from threats to health and safety due to

severe cognitive impairment.

A certification must have been made by a licensed

health care practitioner within the previous 12 months.

Exclusion limited. If the insured was a chronically ill

individual, exclusion of accelerated death benefits is limited to the cost incurred in providing qualified long-term

care services for the insured. In determining the cost incurred, don't include amounts paid or reimbursed by insurance or otherwise. Subject to certain limits, exclude payments received on a periodic basis without regard to

costs.

Interest option on insurance. If an insurance company

pays interest only on proceeds from life insurance left on

deposit, the interest is taxable.

Insurance received in installments. If a beneficiary receives life insurance proceeds in installments, the beneficiary can exclude part of each installment from income.

To determine the part excluded, divide the amount held

by the insurance company (generally the total lump sum

payable at the death of the insured person) by the number

of installments to be paid. Include anything over this excluded part in income as interest.

Specified number of installments. If a beneficiary

will receive a specified number of installments under the

insurance contract, figure the part of each installment the

beneficiary can exclude by dividing the amount held by

the insurance company by the number of installments to

which the beneficiary is entitled. In case the beneficiary

dies before receiving all the installments, a secondary

beneficiary is entitled to the same exclusion.

The balance of the installment, $1,000, is taxable as interest income.

Specified amount payable. If each installment received under the insurance contract is a specific amount

based on a guaranteed rate of interest, but the number of

installments that will be received is uncertain, the part of

each installment excluded from income is the amount held

by the insurance company divided by the number of installments necessary to use up the principal and guaranteed interest in the contract.

Example. The face amount of the policy is $200,000,

and, as beneficiary, you choose to receive annual installments of $12,000. The insurer's settlement option guarantees you this amount for 20 years based on a guaranteed

rate of interest. It also provides that extra interest may be

credited to the principal balance according to the insurer's

earnings. The excludable part of each guaranteed installment is $10,000 ($200,000 ÷ 20 years). The balance of

each guaranteed installment, $2,000, is interest income to

you. The full amount of any additional payment for interest

is income to you.

Installments for life. If the beneficiary under an insurance contract is entitled to receive the proceeds in installments for the rest of the beneficiary’s life without a refund

or period-certain guarantee, the excluded part of each installment can be determined by dividing the amount held

by the insurance company by the beneficiary’s life expectancy. If there is a refund or period-certain guarantee, the

amount held by the insurance company for this purpose is

reduced by the actuarial value of the guarantee.

Example. As beneficiary, you choose to receive the

$50,000 proceeds from a life insurance contract under a

life-income-with-cash-refund option. You are guaranteed

$2,700 a year for the rest of your life (which is estimated

by use of mortality tables to be 25 years from the insured's

death). The actuarial value of the refund feature is $9,000.

The amount held by the insurance company, reduced by

the value of the guarantee, is $41,000 ($50,000 − $9,000)

and the excludable part of each installment representing a

return of principal is $1,640 ($41,000 ÷ 25). The remaining

$1,060 ($2,700 − $1,640) is interest income to you. If you

should die before receiving the entire $50,000, the refund

payable to the refund beneficiary isn't taxable.

Flexible premium contracts. A life insurance contract

(including any qualified additional benefits) qualifies as a

flexible premium life insurance contract if it provides for

the payment of one or more premiums that aren't fixed by

the insurer as to both timing and amount. For a flexible

premium contract issued before January 1, 1985, the proceeds paid under the contract because of the death of the

insured will be excluded from the recipient's income only if

the contract meets the requirements explained under section 101(f).

Example. As beneficiary, you choose to receive

$100,000 of life insurance proceeds in 10 annual installments of $11,000. Each year, you can exclude from your

income $10,000 ($100,000 ÷ 10) as a return of principal.

Publication 559 (2025)

19

Basis of Inherited Property

The basis of property inherited from a decedent is generally one of the following.

• The FMV of the property on the date of the individual's

death.

• The FMV on the alternate valuation date (discussed in

the Instructions for Form 706) if elected by the personal representative.

• The value under the special-use valuation method for

real property used in farming or other closely held

business (see Special-use valuation, later), if elected

by the personal representative.

• The decedent's adjusted basis in land to the extent of

the value excluded from the decedent's taxable estate

as a qualified conservation easement (discussed in

the Instructions for Form 706).

Exception for appreciated property. If you or your

spouse gave appreciated property to an individual during

the 1-year period ending on the date of that individual's

death and you (or your spouse) later acquired the same

property from the decedent, your basis in the property is

the same as the decedent's adjusted basis immediately

before death.

Appreciated property. Appreciated property is property that had an FMV greater than its adjusted basis on

the day it was transferred to the decedent.

Special-use valuation. If you are a qualified heir and you

receive a farm or other closely held business real property

from the estate for which the personal representative elected special-use valuation, the property is valued on the

basis of its actual use rather than its FMV.

If you are a qualified heir and you buy special-use valuation property from the estate, your basis is equal to the

estate's basis (determined under the special-use valuation

method) immediately before your purchase plus any gain

recognized by the estate.

You are a qualified heir if you are an ancestor (parent,

grandparent, etc.), the spouse, or a lineal descendant

(child, grandchild, etc.) of the decedent, a lineal descendant of the decedent's parent or spouse, or the spouse of

any of these lineal descendants.

For more information on special-use valuation, see the

Instructions for Form 706.

Increased basis for special-use valuation property.

Under certain conditions, some or all of the estate tax

benefits obtained by using the special-use valuation will

be subject to recapture. Generally, an additional estate tax

must be paid by the qualified heir if the property is disposed of, or is no longer used for a qualifying purpose

within 10 years of the decedent's death.

If you must pay any additional estate (recapture) tax,

you can elect to increase your basis in the special-use valuation property to its FMV on the date of the decedent's

death (or on the alternate valuation date, if it was elected

by the personal representative). If you elect to increase

your basis, you must pay interest on the recapture tax for

20

the period beginning 9 months after the decedent's death

until the date you pay the recapture tax.

For more information on the recapture tax, see the Instructions for Form 706-A, United States Additional Estate

Tax Return.

S corporation stock. The basis of inherited S corporation stock must be reduced if there is income in respect of

a decedent attributable to that stock.

Joint interest. Figure the surviving tenant's new basis of

jointly owned property (joint tenancy or tenancy by the entirety) by adding the surviving tenant's original basis in the

property to the value of the part of the property included in

the decedent's estate, discussed earlier. Subtract from the

sum any deductions for wear and tear, such as depreciation or depletion, allowed to the surviving tenant on that

property.

Example. F. Maple and sibling, A. Maple, owned, as

joint tenants with right of survivorship, rental property they

purchased for $60,000. A. Maple paid $15,000 of the purchase price and F. Maple paid $45,000. Under local law,

each had a half interest in the income from the property.

When F. Maple died, the FMV of the property was

$100,000. Depreciation deductions allowed before F. Maple's death were $20,000. A. Maple's basis in the property

is $80,000, figured as follows:

A. Maple's original basis . . . . . . . . . . . .

$15,000

Interest acquired from F. Maple

75,000

(3/4 of $100,000) . . . . . . . . . . . . . . . . .

Minus: 1/2 of $20,000 depreciation . . . . . . . . . . . . . .

A. Maple's basis . . . . . . . . . . . . . . . . . . . . . . . .

$90,000

10,000

$80,000

Qualified joint interest. One-half of the value of property owned by a decedent and spouse as tenants by the

entirety, or as joint tenants with right of survivorship if the

decedent and spouse are the only joint tenants, is included in the decedent's gross estate. This is true regardless

of how much each contributed toward the purchase price.

Figure the basis for a surviving spouse by adding

one-half of the property's cost basis to the value included

in the gross estate. Subtract from this sum any deductions

for wear and tear, such as depreciation or depletion, allowed on that property to the surviving spouse.

Example. D. Gilbert and J. Gilbert owned, as tenants

by the entirety, rental property they purchased for $60,000.

D. Gilbert paid $15,000 of the purchase price and J. Gilbert paid $45,000. Under local law, each had a half interest in the income from the property. When J. Gilbert died,

the FMV of the property was $100,000. Depreciation deductions allowed before J. Gilbert's death were $20,000.

D. Gilbert’s basis in the property is $70,000, figured as follows:

One-half of cost basis (1/2 of $60,000) . . .

$30,000

Interest acquired from J. Gilbert

50,000

(1/2 of $100,000) . . . . . . . . . . . . . . . . .

1

Minus: /2 of $20,000 depreciation . . . . . . . . . . . . . .

D. Gilbert's basis . . . . . . . . . . . . . . . . . . . . . . .

$80,000

10,000

$70,000

Publication 559 (2025)

See Pub. 551, Basis of Assets, for more information on

basis. If the decedent and their spouse lived in a community property state, see the discussion in that publication

about figuring the basis of community property after a

spouse's death.

Depreciation. If a beneficiary can depreciate inherited

property, the Modified Accelerated Cost Recovery System

(MACRS) must be used to determine depreciation.

For joint interests and qualified joint interests, use the

following computations to figure depreciation.

• The first computation is for the original basis in the

property.

• The second computation is for the inherited part of the

property.

Continue depreciating the original basis under the same

method used in previous years. Depreciate the inherited

part using MACRS.

MACRS consists of two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). For more information on

MACRS, see Pub. 946, How To Depreciate Property.

Valuation misstatements. If the value or adjusted basis

of any property claimed on an income tax return is 150%

or more of the amount determined to be the correct

amount, there is a substantial valuation misstatement. If

the value or adjusted basis is 200% or more of the amount

determined to be the correct amount, there is a gross valuation misstatement.

Understatements. A substantial estate or gift tax valuation misstatement occurs when the value of property reported is 65% or less of the actual value of the property. A

gross valuation misstatement occurs if any property on a

return is valued at 40% or less of the value determined to

be correct.

Penalty. If a misstatement results in an underpayment

of tax of more than $5,000, an addition to tax of 20% of

the underpayment can apply. The penalty increases to

40% if the value or adjusted basis reported is a gross valuation misstatement.

The IRS may waive all or part of the 20% addition to tax

(for substantial valuation overstatement) if the following

apply.

• The claimed value of the property was based on a

qualified appraisal made by a qualified appraiser.

• In addition to obtaining such appraisal, the taxpayer

made a good faith investigation of the value of the

contributed property.

No waiver is available for the 40% addition to tax (for

gross valuation overstatement).

For transitional guidance on the definitions of “qualified

appraisal” and “qualified appraiser,” see Notice 2006-96,

2006-46 I.R.B. 902, available at IRS.gov/irb/2006-46_IRB/

ar13.html.

Publication 559 (2025)

The definitions apply to appraisals prepared for the following.

• Donated property for which a deduction of more than

$5,000 is claimed.

• Returns filed after August 17, 2006.

Holding period. If you sell or dispose of inherited property that is a capital asset, the gain or loss is considered

long term, regardless of how long you held the property.

Property distributed in kind. Your basis in property

distributed in kind by a decedent's estate is the same as

the estate's basis immediately before the distribution plus

any gain, or minus any loss, recognized by the estate.

Property is distributed in kind if it satisfies your right to receive another property or amount, such as the income of

the estate or a specific dollar amount. Property distributed

in kind generally includes any noncash property you receive from the estate other than the following.

• A specific bequest (unless it must be distributed in

more than three installments).

• Real property, the title to which passes directly to you

under local law.

For information on an estate's recognized gain or loss on

distributions in kind, see Income To Include under Income

Tax Return of an Estate—Form 1041, later.

Other Items of Income

Some other items of income that a survivor or beneficiary

may receive are discussed below. Lump-sum payments

received by the surviving spouse or beneficiary of a deceased employee may represent the following.

• Accrued salary payments.

• Distributions from employee profit-sharing, pension,

annuity, and stock bonus plans.

• Other items that should be treated separately for tax

purposes.

The treatment of these lump-sum payments depends on

what the payments represent.

Public safety officers. Special rules apply to certain

amounts received due to the death of a public safety officer (a law enforcement officer, fire fighter, chaplain, or

member of an ambulance crew or rescue squad).

Caution: The provisions for public safety officers apply

to a chaplain killed in the line of duty after September 10,

2001, if the chaplain was responding to a fire, rescue, or

police emergency as a member or employee of a fire or

police department.

Death benefits. The death benefit payable to eligible

survivors of public safety officers who die as a result of

traumatic injuries sustained in the line of duty isn't included in either the beneficiaries' income or the decedent's

gross estate. This benefit is administered through the Bureau of Justice Assistance (BJA).

21

The BJA can pay the eligible survivors an emergency

interim benefit up to $3,000 if it determines that a public

safety officer's death is one for which a death benefit will

probably be paid. If there is no final payment, the recipient

of the interim benefit is liable for repayment. However, the

BJA may waive all or part of the repayment if it will cause a

hardship. Any repayment waived isn't included in income.

Survivor benefits. Generally, a survivor annuity received by the spouse, former spouse, or child of a public

safety officer killed in the line of duty is excluded from the

recipient's income. The annuity must be provided under a

government plan and is excludable to the extent that it is

attributable to the officer's service as a public safety officer.

The exclusion doesn't apply if the recipient's actions

were responsible for the officer's death. It also doesn't apply in the following circumstances.

• The death was caused by the intentional misconduct

of the officer or by the officer's intention to cause such

death.

• The officer was voluntarily intoxicated at the time of

death.

• The officer was performing officer duties in a grossly

negligent manner at the time of death.

Salary or wages. Salary or wages paid after the employee's death are usually taxable income to the beneficiary.

See Wages, earlier, under Specific Types of Income in Respect of a Decedent.

Caution: If the decedent is a specified terrorist victim

(see Specified Terrorist Victim, earlier), certain income received by the beneficiary or the estate isn't taxable. For

more information, see Pub. 3920.

Rollover distributions. An employee's surviving spouse

who receives an eligible rollover distribution may roll it

over tax free into an IRA, a qualified plan, a section 403

annuity, or a section 457 plan. For more information, see

Pub. 575, Pension and Annuity Income; and Form 4972,

Tax on Lump-Sum Distributions.

Rollovers by nonspouse beneficiary. A beneficiary

other than the employee's surviving spouse may be able

to roll over all or part of a distribution from an eligible retirement plan of a deceased employee. The nonspouse

beneficiary must be the designated beneficiary of the employee. The distribution must be a direct trustee-to-trustee

transfer to the beneficiary’s IRA set up to receive the distribution. The transfer will be treated as an eligible rollover

distribution and the receiving plan will be treated as an inherited IRA. For more information on inherited IRAs, see

Pubs. 590-A and 590-B.

Pensions and annuities. For beneficiaries who receive

pensions and annuities, see Pub. 575. For beneficiaries of

federal civil service employees or retirees, see Pub. 721,

Tax Guide to U.S. Civil Service Retirement Benefits.

Inherited IRAs. If a person other than the decedent's

spouse inherits the decedent's traditional IRA or Roth IRA,

22

that person can't treat the IRA as one established on the

person’s behalf. If a distribution from a traditional IRA is

from contributions that were deducted or from earnings

and gains in the IRA, it is fully taxable income. If there

were nondeductible contributions, an allocation between

taxable and nontaxable income must be made. For information on distributions from a Roth IRA, see the discussion earlier under Income in Respect of a Decedent. The

inherited IRA can't be rolled over into, or receive a rollover

from, another IRA. No deduction is allowed for amounts

paid into that inherited IRA. For more information about

IRAs, see Pubs. 590-A and 590-B.

Estate income. Estates may have to pay federal income

tax. Beneficiaries may have to pay tax on their share of estate income. However, there is never a double tax. See

Distributions to Beneficiaries, later.

Income Tax Return of an

Estate—Form 1041

An estate is a taxable entity separate from the decedent

and comes into being with the death of the individual. It

exists until the final distribution of its assets to the heirs

and other beneficiaries. Income earned by the decedent

up to and including the date of death is included on the

decedent's final Form 1040 tax return. Income received after the date of death is included on the estate's Form 1041

tax return. The tax is generally figured in the same manner

and on the same basis as for individuals, with certain differences in the computation of deductions and credits, as

explained later.

The estate's income, like an individual's income, must

be reported annually on either a calendar or fiscal year basis. The personal representative chooses the estate's accounting period upon filing the first Form 1041. The estate's first tax year can be any period that ends on the last

day of a month and doesn't exceed 12 months.

Generally, once chosen, the tax year can't be changed

without IRS approval. Also, on the first income tax return,

the personal representative must choose the accounting

method (cash, accrual, or other) to report the estate's income. Once a method is used, it ordinarily can't be

changed without IRS approval. For a more complete discussion of accounting periods and methods, see Pub.

538.

Filing Requirements

Every domestic estate with gross income of $600 or more

during a tax year must file a Form 1041. If one or more of

the beneficiaries of the domestic estate are nonresident

aliens, the personal representative must file Form 1041,

regardless of the estate’s gross income.

A fiduciary for a nonresident alien estate with

U.S.-source income, including any income that is effectively connected with the conduct of a trade or business in

Publication 559 (2025)

the United States, must file Form 1040-NR as the income

tax return of the estate.

A nonresident alien who was a resident of Puerto Rico,

Guam, American Samoa, or the Commonwealth of the

Northern Mariana Islands for the entire tax year will, for

this purpose, be treated as a resident alien of the United

States.

To establish Excess Deductions for the beneficiaries, a

return must be filed for the estate along with a schedule

showing the computation of each kind of deduction and

the allocation of each to the beneficiaries.

Schedule K-1 (Form 1041)

The personal representative must file a separate Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc., or an acceptable substitute (described below), for each beneficiary. File these schedules

with Form 1041.

The personal representative must ask each beneficiary

to provide a TIN, which must be reported on the Schedule K-1 (Form 1041). A $50 penalty is charged for each

failure to provide the identifying number of each beneficiary unless reasonable cause is established. A nonresident alien beneficiary with a withholding certificate must

generally provide a TIN (see Pub. 515). A TIN isn't required for an executor or administrator of the estate unless

that person is also a beneficiary.

The personal representative must also give a Schedule K-1 (Form 1041), or a substitute, to each beneficiary

by the date on which the Form 1041 is filed. Failure to provide this payee statement can result in a penalty of $340

for each failure. This penalty also applies if information is

omitted or incorrect information is included on the payee

statement. If it is shown that such failure is due to intentional disregard of the filing requirement, the penalty

amount increases.

No prior approval is needed for a substitute Schedule K-1 (Form 1041) that is an exact copy of the official

schedule or that follows the specifications in Pub. 1167,

General Rules and Specifications for Substitute Forms

and Schedules. Prior approval is required for any other

substitute Schedule K-1 (Form 1041).

Beneficiaries. The personal representative has a fiduciary responsibility to the ultimate recipients of the income

and the property of the estate. While the courts use a

number of names to designate specific types of beneficiaries or the recipients of various types of property, this publication refers to all of them as “beneficiaries.”

Liability of the beneficiary. The income tax liability of

an estate attaches to the assets of the estate. If the income is distributed or must be distributed during the current tax year, the income is reportable by each beneficiary

on the beneficiary’s individual income tax return. If the income doesn't have to be distributed, and isn't distributed

but is retained by the estate, the income tax on the income

is payable by the estate. If the income is distributed later

Publication 559 (2025)

without the payment of the taxes due, the beneficiary can

be liable for tax due and unpaid to the extent of the value

of the estate assets received.

Income of the estate is taxed to either the estate or the

beneficiary, but not to both.

Nonresident alien beneficiary. In addition to filing

Form 1041, the personal representative may need to file

Form 1040-NR and pay the tax due, if any, if there is a

nonresident alien beneficiary. There are a number of factors which determine whether a Form 1040-NR is required. For information on who must file Form 1040-NR,

see Pub. 519, U.S. Tax Guide for Aliens.

If a nonresident alien has an appointed agent in the

United States, the personal representative isn't responsible for filing Form 1040-NR and paying any tax due. However, a copy of the document appointing the agent must

be attached to the estate's Form 1041.

The personal representative must also file Form 1042,

Annual Withholding Tax Return for U.S. Source Income of

Foreign Persons, and Form 1042-S, Foreign Person's U.S.

Source Income Subject to Withholding, to report and

transmit withheld tax on distributable net income (discussed later) actually distributed. This applies to the extent the distribution consists of an amount subject to withholding. For more information, see Pub. 515.

Amended Return

If an amended Form 1041 must be filed, use a copy of the

form for the appropriate year and check the “Amended return” box. Complete the entire return, correct the appropriate lines with the new information, and refigure the tax liability. On an attached sheet, explain the reason for the

changes and identify the lines and amounts changed.

Note: If the amended return results from an NOL loss

carryback, check the "Net operating loss carryback" box.

For more information, see the Instructions for Form 1041.

If the amended return results in a change to income, or

a change in distribution of any income or other information

provided to a beneficiary, an amended Schedule K-1

(Form 1041) must be filed with Form 1041 and a copy

given to each beneficiary. Check the “Amended K-1” box

at the top of Schedule K-1 (Form 1041).

Information Returns

Even though the personal representative may not have to

file an income tax return for the estate, Form 1099-DIV,

Form 1099-INT, Form 1099-MISC, or Form 1099-NEC

may need to be filed if the estate received income as a

nominee or middleman for another person. For more information on filing information returns, see the General

Instructions for Certain Information Returns.

The personal representative will not have to file information returns for the estate if the estate is the owner of

record, Form 1041 is filed for the estate (reporting the

name, address, and identifying number of each actual

23

owner), and a completed Schedule K-1 (Form 1041) is

provided to each actual owner.

Penalty. A penalty of up to $340 can be charged for each

failure to file or failure to include correct information on an

information return. (Failure to include correct information

includes failure to include all the information required.) If it

is shown that such failure is due to intentional disregard of

the filing requirement, the penalty amount increases.

See the General Instructions for Certain Information

Returns for more information.

Copy of the Will

The personal representative does not have to include a

copy of the decedent's will with Form 1041. If the will is

later requested, attach a statement to it indicating the provisions that determine how much of the estate's income is

taxable to the estate or to the beneficiaries. A statement

signed by the personal representative under penalties of

perjury that the will is a true and complete copy should

also be attached.

Income To Include

The estate's taxable income is generally figured the same

way as an individual's income, except as explained in the

following discussions.

Caution: If the decedent is a specified terrorist victim

(see Specified Terrorist Victim, earlier), certain income received by the estate isn't taxable. See Pub. 3920.

Gross income of an estate consists of all items of income received or accrued during the tax year. It includes

dividends, interest, rents, royalties, gain from the sale of

property, and income from business, partnerships, trusts,

and any other sources. For a discussion of income from

dividends, interest, and other investment income, as well

as gains and losses from the sale of investment property,

see Pub. 550, Investment Income and Expenses. For a

discussion of gains and losses from the sale of other property, including business property, see Pub. 544, Sales and

Other Dispositions of Assets.

If the personal representative's duties include the operation of the decedent's business, see Pub. 334. That publication provides general information about the tax laws

that apply to a sole proprietorship.

Income in respect of a decedent. The personal representative of the estate may receive income the decedent

would have reported had death not occurred. For an explanation of this income, see Income in Respect of a Decedent under Other Tax Information, earlier. An estate

may qualify to claim a deduction for estate taxes if the estate must include in gross income for any tax year an

amount of income in respect of a decedent. See Estate

Tax Deduction under Other Tax Information, earlier.

Gain (or loss) from sale of property. During the administration of the estate, the personal representative may

find it necessary or desirable to sell all or part of the es24

tate's assets to pay debts and expenses of administration,

or to make proper distributions of the assets to the beneficiaries. While the personal representative may have the

legal authority to dispose of the property, title to it may be

vested (given a legal interest in the property) in one or

more of the beneficiaries. This is usually true of real property. To determine whether any gain or loss must be reported by the estate or by the beneficiaries, consult local law

to determine the legal owner.

Redemption of stock to pay death taxes. Under

certain conditions, a distribution to a shareholder (including the estate) in redemption of stock included in the decedent's gross estate may be allowed capital gain (or loss)

treatment.

Character of asset. The character of an asset in the

hands of an estate determines whether gain or loss on its

sale or other disposition is capital or ordinary. The asset's

character depends on how the estate holds or uses it. If it

was a capital asset to the decedent, it will generally be a

capital asset to the estate. If it was land or depreciable

property used in the decedent's business and the estate

continues the business, it will generally have the same

character to the estate that it had in the decedent's hands.

If it was held by the decedent for sale to customers, it will

generally be considered to be held for sale to customers

by the estate if the decedent's business continues to operate during the administration of the estate.

Caution: The gain from a sale of depreciable property

between an estate and a beneficiary of that estate will be

treated as ordinary income, unless the sale or exchange

was made to satisfy a pecuniary (cash) bequest.

Sale of decedent's residence. If the estate is the legal owner of a decedent's residence and the personal representative sells it in the course of administration, the tax

treatment of gain or loss depends on how the estate holds

or uses the former residence. For example, if, as the personal representative, you intend to realize the value of the

house through sale, the residence is a capital asset held

for investment and gain or loss is capital gain or loss

(which may be deductible). This is the case even though it

was the decedent's personal residence and even if you

didn't rent it out. If, however, the house isn't held for business or investment use (for example, if you intend to permit a beneficiary to live in the residence rent free and then

distribute it to the beneficiary to live in), and you later decide to sell the residence without first converting it to business or investment use, any gain is capital gain, but a loss

isn't deductible.

Holding period. An estate (or other recipient) that acquires property from a decedent and sells or otherwise

disposes of it is considered to have held that property for

more than 1 year, no matter how long the estate and the

decedent actually held the property.

Basis of property. The basis used to figure gain or

loss for property the estate receives from the decedent is

usually its FMV at the date of death. See Basis of Inherited Property under Other Tax Information, earlier, for other

basis in inherited property.

Publication 559 (2025)

If the estate purchases property after the decedent's

death, the basis will generally be its cost.

The basis of certain appreciated property the estate receives from the decedent will be the decedent's adjusted

basis in the property immediately before death. This applies if the property was acquired by the decedent as a gift

during the 1-year period before death, the property's FMV

on the date of the gift was greater than the donor's adjusted basis, and the proceeds of the sale of the property are

distributed to the donor (or the donor's spouse).

Schedule D (Form 1041) and Form 8949. Use Form

8949, Sales and Other Dispositions of Capital Assets, to

report most sales and exchanges of capital assets. Use

Schedule D (Form 1041), Capital Gains and Losses, to report the overall capital gains and losses from transactions

reported on Form 8949, certain transactions that don't

have to be reported on Form 8949, and certain other capital gains and losses. For additional information, see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1041).

Installment obligations. If an installment obligation

owned by the decedent is transferred by the estate to the

obligor (buyer or person obligated to pay) or is canceled at

death, include the income from that event in the gross income of the estate. See Installment obligations under Income in Respect of a Decedent, earlier. See Pub. 537 for

information about installment sales.

Gain from sale of special-use valuation property. If

the personal representative elected special-use valuation

for farm or other closely held business real property and

that property is sold to a qualified heir, the estate will recognize gain on the sale if the FMV on the date of the sale

exceeds the FMV on the date of the decedent's death (or

on the alternate valuation date if it was elected).

Qualified heirs. Qualified heirs include the decedent's

ancestors (parents, grandparents, etc.) and spouse, the

decedent's lineal descendants (children, grandchildren,

etc.) and their spouses, and lineal descendants (and their

spouses) of the decedent's parents or spouse.

For more information about special-use valuation, see

Form 706 and its instructions.

Gain from transfer of property to a political organization. Appreciated property transferred to a political organization is treated as sold by the estate. Appreciated property is property that has an FMV (on the date of the

transfer) greater than the estate's basis. The gain recognized is the difference between the estate's basis and the

FMV on the date transferred.

A political organization is any party, committee, association, fund, or other organization formed and operated to

accept contributions or make expenditures for influencing

the nomination, election, or appointment of an individual

to any federal, state, or local public office.

Gain or loss on distributions in kind. An estate recognizes gain or loss on a distribution of property in kind to a

beneficiary only in the following situations.

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1. The distribution satisfies the beneficiary's right to receive either of the following.

a. A specific dollar amount (whether payable in cash,

in unspecified property, or in both).

b. A specific property other than the property distributed.

2. An election is made to recognize the gain or loss on

the estate's income tax return (section 643(e)(3) election).

The gain or loss is usually the difference between the

FMV of the property when distributed and the estate's basis in the property. However, see Gain from sale of special-use valuation property, earlier, for a limit on the gain

recognized on a transfer of such property to a qualified

heir.

If you elect to recognize gain or loss, the election applies to all noncash distributions during the tax year except

charitable distributions and specific bequests. To make

the election, report the transaction on Form 8949 and/or

Schedule D (Form 1041), as applicable, and check the

box on Form 1041, Other Information, line 7. The election

must be made by the due date (including extensions) of

the estate's income tax return for the year of distribution.

However, if the return is timely filed without making the

election, the election can be made by filing an amended

return within 6 months of the due date of the return (excluding extensions). Attach Form 8949 and/or Schedule D

(Form 1041), as applicable, to the amended return and

enter “Filed pursuant to section 301.9100-2” on the form.

File the amended return at the same address you filed the

original return. IRS consent is required to revoke the election.

For more information, see Property distributed in kind

under Income Distribution Deduction, later.

Caution: Under the related persons rules, a loss can't

be claimed for property distributed to a beneficiary unless

the distribution is in discharge of a pecuniary bequest.

Also, any gain on the distribution of depreciable property

is ordinary income.

Exemption and Deductions

In figuring taxable income, an estate is generally allowed

the same deductions as an individual. Special rules, however, apply to some deductions for an estate. This section

includes discussions of those deductions affected by the

special rules.

Exemption Deduction

An estate is allowed an exemption deduction of $600 in

figuring its taxable income. No exemption for dependents

is allowed to an estate. Even though the first return of an

estate may be for a period of less than 12 months, the exemption is $600. If, however, the estate was given permission to change its accounting period, the exemption is $50

for each month of the short year.

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Charitable Contributions

An estate qualifies for a deduction for gross income paid

or permanently set aside for qualified charitable organizations. The AGI limits for individuals don't apply. However,

to be deductible by an estate, the contribution must be

specifically provided for in the decedent's will. If there is

no will, or if the will makes no provision for the payment to

a charitable organization, then a deduction won't be allowed even though all beneficiaries may agree to the gift.

You can't deduct any contribution unless it is attributable to the estate's gross income. Therefore, amounts distributed to a qualified charity from the estate's tax-exempt

income or corpus (principal) do not qualify for the charitable contribution deduction. If the will specifically provides

that the contributions are to be paid out of the estate's

gross income, the contributions are fully deductible to the

extent this provision in the will has economic effect independent of income tax consequences. However, if the provision lacks economic effect or the will provides that such

contributions are paid out the of the estate's income, but

contains no specific provisions regarding character (for

example, gross income or tax-exempt income), then the

contributions are considered to consist of the same proportion of each class of the items of income of the estate

as the total of each class bears to the total of all classes.

You can't deduct a qualified conservation easement

granted after the date of death and before the due date of

the estate tax return. A contribution deduction is allowed

to the estate for estate tax purposes.

For more information about contributions, see Pub.

526, Charitable Contributions, and Pub. 561, Determining

the Value of Donated Property.

Losses

Generally, an estate can claim a deduction for a loss it

sustains on the sale of property. This includes a loss from

the sale of property (other than stock) to a personal representative of the estate, unless that person is a beneficiary

of the estate.

For a discussion of an estate's recognized loss on a

distribution of property in kind to a beneficiary, see Income

To Include, earlier.

Caution: An estate and a beneficiary of that estate are

generally treated as related persons for purposes of the

disallowance of a loss on the sale of an asset between related persons. The disallowance doesn't apply to a sale or

exchange made to satisfy a pecuniary bequest.

Net operating loss deduction. An estate can claim a

net operating loss (NOL) deduction, figured in the same

way as an individual's, except that it can't take the income

distribution deduction (discussed later) or the deduction

for charitable contributions in figuring the loss or the loss

carryover. For a discussion of the carryover of an unused

NOL to a beneficiary upon termination of the estate, see

Termination of Estate, later.

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For information on NOLs, see Pub. 536.

Casualty and theft losses. Losses incurred from casualties and thefts during the administration of the estate

can be deducted only if they haven't been claimed on the

federal estate tax return (Form 706). The personal representative must file a statement with the estate's income

tax return waiving the deduction for estate tax purposes.

See Administration Expenses, later.

The same rules that apply to individuals apply to the estate, except that in figuring the AGI of the estate used to

figure the deductible loss, you deduct any administration

expenses claimed. Use Form 4684, Casualties and

Thefts, and its instructions to figure any loss deduction.

Carryover losses. Carryover losses resulting from NOLs

or capital losses sustained by the decedent before death

can't be deducted on the estate's income tax return.

Administration Expenses

Expenses of administering an estate can be deducted either from the gross estate in figuring the federal estate tax

on Form 706 or from the estate's gross income in figuring

the estate's income tax on Form 1041. However, these expenses can't be claimed for both estate tax and income

tax purposes. In most cases, this rule also applies to expenses incurred in the sale of property by an estate (not

as a dealer).

To prevent a double deduction, amounts otherwise allowable in figuring the decedent's taxable estate for federal estate tax on Form 706 won't be allowed as a deduction in figuring the income tax of the estate or of any other

person unless the personal representative files a statement, in duplicate, that the items of expense, as listed in

the statement, haven't been claimed as deductions for

federal estate tax purposes and that all rights to claim

such deductions are waived. One deduction or part of a

deduction can be claimed for income tax purposes if the

appropriate statement is filed, while another deduction or

part is claimed for estate tax purposes. Claiming a deduction in figuring the estate income tax isn't prevented when

the same deduction is claimed on the estate tax return so

long as the estate tax deduction isn't finally allowed and

the preceding statement is filed. The statement can be

filed with the income tax return or at any time before the

expiration of the statute of limitations that applies to the

tax year for which the deduction is sought. This waiver

procedure also applies to casualty losses incurred during

administration of the estate.

Accrued expenses. The rules preventing double deductions don't apply to deductions for taxes, interest, business expenses, and other items accrued at the date of

death. These expenses are allowable as a deduction for

estate tax purposes as claims against the estate and are

also allowable as deductions in respect of a decedent for

income tax purposes. Deductions for interest, business

expenses, and other items not accrued at the date of the

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decedent's death are allowable only as a deduction for administration expenses for both estate and income tax purposes and don't qualify for a double deduction.

Expenses allocable to tax-exempt income. When figuring the estate's taxable income on Form 1041, you can't

deduct administration expenses allocable to any of the estate's tax-exempt income. However, you can deduct these

administration expenses when figuring the taxable estate

for federal estate tax purposes on Form 706.

Interest on estate tax. Interest paid on installment payments of estate tax isn't deductible for income or estate

tax purposes.

The total tax-exempt interest earned by an estate must

be shown on Form 1041, Other Information, line 1. The

beneficiary's portion of the tax-exempt interest is shown

on Schedule K-1 (Form 1041).

Exemption deduction. The exemption deduction isn't

allowed.

Capital gains. Capital gains aren't automatically included in distributable net income. However, they can be included in distributable net income if any of the following

apply.

• The gain is allocated to income in the accounts of the

estate or by notice to the beneficiaries under the terms

of the will or by local law.

Depreciation and Depletion

• The gain is allocated to the corpus or principal of the

The allowable deductions for depreciation and depletion

that accrue after the decedent's death must be apportioned between the estate and the beneficiaries, depending on the income of the estate allocable to each.

• The gain is used, under either the terms of the will or

Caution: An estate can't elect to treat the cost of certain depreciable business assets as an expense under

section 179.

• Charitable contributions are made out of capital gains.

Example. In 2025, the decedent's estate realized

$3,000 of business income during the administration of

the estate. The personal representative distributed $1,000

of the income to the decedent's child, Alex, and $2,000 to

the second child, Jo. The allowable depreciation on the

business property is $300. Alex can take a deduction of

$100 [($1,000 ÷ $3,000) × $300], and Jo can take a deduction of $200 [($2,000 ÷ $3,000) × $300].

Income Distribution Deduction

An estate is allowed a deduction for the tax year for any income that must be distributed currently and for other

amounts that are properly paid, credited, or required to be

distributed to beneficiaries. This deduction is limited to the

distributable net income of the estate.

For special rules about distributions that apply in figuring the estate's income distribution deduction, see Bequest under Distributions to Beneficiaries, later.

Distributable net income. Distributable net income (figured on Form 1041, Schedule B) is the estate's taxable income, excluding the income distribution deduction, with

the following additional modifications.

Tax-exempt interest. Tax-exempt interest, including

exempt-interest dividends, is included in the distributable

net income but is reduced by the following items.

• Expenses not allowed in computing the estate's taxable income because they were attributable to tax-exempt interest (see Expenses allocable to tax-exempt

income under Administration Expenses, earlier).

• The portion of tax-exempt interest deemed to have

been used to make a charitable contribution. See

Charitable Contributions, earlier.

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estate and is actually distributed to the beneficiaries

during the tax year.

the practice of the personal representative, to determine the amount that is distributed or must be distributed.

Generally, when you determine capital gains to be included in distributable net income, the exclusion for gain

from the sale or exchange of qualified small business

stock isn't taken into account.

Capital losses. Capital losses are excluded in figuring

distributable net income unless they enter into the computation of any capital gain that is distributed or must be distributed during the year.

Separate shares rule. The separate shares rule must be

used if both of the following are true.

• The estate has more than one beneficiary.

• The economic interest of a beneficiary doesn't affect

and isn't affected by the economic interest of another

beneficiary.

A bequest of a specific sum of money or of property isn't a

separate share (see Bequest, later).

If the separate shares rule applies, the separate shares

are treated as separate estates for the sole purpose of determining the distributable net income allocable to a share.

Each share's distributable net income is based on that

share's portion of gross income and any applicable deductions or losses. The personal representative must use

a reasonable and equitable method to make the allocations.

Generally, gross income is allocated among the separate shares based on the income each share is entitled to

under the will or applicable local law. This includes gross

income not received in cash, such as a distributive share

of partnership tax items.

If a beneficiary isn't entitled to any of the estate's income, the distributable net income for that beneficiary is

zero. The estate can't deduct any distribution made to that

beneficiary and the beneficiary doesn't have to include the

distribution in its gross income. However, see Income in

Respect of a Decedent, later in this discussion.

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Example. Pat's will directs you, the executor, to distribute ABC Corporation stock and all dividends from that

stock to Pat’s child, Eli, and the residue of the estate to

Pat’s second child, Morgan. The estate has two separate

shares consisting of the dividends on the stock left to Eli

and the residue of the estate left to Morgan. The distribution of the ABC Corporation stock qualifies as a bequest,

so it isn't a separate share.

If any distributions, other than the ABC Corporation

stock, are made during the year to either Eli or Morgan,

you must determine the distributable net income for each

separate share. The distributable net income for Eli's separate share includes only the dividends attributable to the

ABC Corporation stock. The distributable net income for

Morgan's separate share includes all other income.

Income in respect of a decedent. This income is allocated among the separate shares that could potentially

be funded with these amounts, even if the share isn't entitled to receive any income under the will or applicable local law. This allocation is based on the relative value of

each share that could potentially be funded with these

amounts.

Example 1. Frankie’s will directs you, the executor, to

divide the residue of the estate (valued at $900,000)

equally between Frankie’s two children, Jamie and Ash.

Under the will, you must fund Jamie’s share first with the

proceeds of Frankie's traditional IRA. The $90,000 balance in the IRA was distributed to the estate during the

year. This amount is included in the estate's gross income

as income in respect of a decedent and is allocated to the

corpus of the estate. The estate has two separate shares,

one for the benefit of Jamie and one for the benefit of Ash.

If any distributions are made to either Jamie or Ash during

the year, then, for purposes of determining the distributable net income for each separate share, the $90,000 of income in respect of a decedent must be allocated only to

Jamie's share.

Example 2. Assume the same facts as in Example 1,

except that you must fund Jamie's share first with DEF

Corporation stock valued at $300,000, instead of the IRA

proceeds. To determine the distributable net income for

each separate share, the $90,000 of income in respect of

a decedent must be allocated between the two shares to

the extent they could potentially be funded with that income. The maximum amount of Jamie's share that could

be funded with that income is $150,000 ($450,000 value

of share less $300,000 funded with stock). The maximum

amount of Ash's share that could be funded is $450,000.

Based on the relative values, Jamie's distributable net income includes $22,500 ($150,000/$600,000 x $90,000) of

the income in respect of a decedent and Ash's distributable net income includes $67,500 ($450,000/$600,000 x

$90,000).

Income required to be distributed currently. The income distribution deduction includes any income that, under the terms of the decedent's will or by reason of local

law, must be distributed currently. This includes an amount

that may be paid out of income or corpus (such as an an28

nuity) to the extent it is paid out of income for the tax year.

The deduction is allowed to the estate even if the personal

representative doesn't make the distribution until a later

year or makes no distribution until the final settlement and

termination of the estate.

Any other amount paid, credited, or required to be

distributed. Any other amount paid, credited, or required

to be distributed is included in the income distribution deduction of the estate only in the year actually paid, credited, or distributed. If there is no specific requirement by local law or by the terms of the will that income earned by

the estate during administration be distributed currently, a

deduction for distributions to the beneficiaries will be allowed to the estate, but only for the actual distributions

during the tax year.

If the personal representative has discretion as to when

the income is distributed, the deduction is allowed only in

the year of distribution.

The personal representative can elect to treat distributions paid or credited within 65 days after the close of the

estate's tax year as having been paid or credited on the

last day of that tax year. The election is made by completing Form 1041, Other Information, line 6. If a tax return

isn't required, the election is made on a statement filed

with the IRS office where the return would have been filed.

The election is irrevocable for the tax year and is only effective for the year of the election.

Interest in real estate. The value of an interest in real

estate owned by a decedent, title to which passes directly

to the beneficiaries under local law, isn't included as any

other amount paid, credited, or required to be distributed.

Property distributed in kind. If an estate distributes

property in kind, the estate's deduction is ordinarily the

lesser of its basis in the property or the property's FMV

when distributed. However, the deduction is the property's

FMV if the estate recognizes gain on the distribution. See

Gain or loss on distributions in kind under Income To Include, earlier.

Property is distributed in kind if it satisfies the beneficiary's right to receive another property or amount, such

as the income of the estate or a specific dollar amount. It

generally includes any noncash distribution other than the

following.

• A specific bequest (unless it must be distributed in

more than three installments).

• Real property, the title to which passes directly to the

beneficiary under local law.

Tax-exempt income not deductible. The estate can't

take an income distribution deduction for any item of distributable net income not included in the estate's gross income.

Example. An estate has distributable net income of

$2,000, consisting of $1,000 of dividends and $1,000 of

tax-exempt interest. Distributions to the beneficiary total

$1,500. Except for this rule, the income distribution

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deduction would be $1,500 ($750 of dividends and $750

of tax-exempt interest). However, as the result of this rule,

the income distribution deduction is limited to $750, because no deduction is allowed for the tax-exempt interest

distributed.

generally allocated between the estate and the beneficiaries. However, estates aren't allowed the credit for the elderly or the disabled, the child tax credit, or the earned income credit discussed earlier under Final Income Tax

Return for Decedent—Form 1040 or 1040-SR.

Denial of double deduction. A deduction can't be

claimed twice. If an amount is considered to have been

distributed to a beneficiary of an estate in a preceding tax

year, it can't again be included in figuring the deduction for

the year of the actual distribution.

Foreign tax credit. The foreign tax credit is discussed in

Pub. 514, Foreign Tax Credit for Individuals.

Example. The decedent's will provides that the estate

must distribute currently all of its income to a beneficiary.

For administrative convenience, the personal representative didn't make a distribution of part of the income for the

tax year until the first month of the next tax year. The

amount must be deducted by the estate in the first tax

year, and must be included in the income of the beneficiary in that year. This amount can't be deducted again by

the estate in the following year when it is paid to the beneficiary, nor must the beneficiary again include the amount

in income in that year.

Charitable contribution. Any amount allowed as a charitable deduction by the estate in figuring the estate's taxable income can't be claimed again as a deduction for a

distribution to a beneficiary.

Funeral and Medical Expenses

No deduction can be taken for funeral expenses or medical and dental expenses on the estate's Form 1041.

Funeral expenses. Funeral expenses paid by the estate

aren't deductible in figuring the estate's taxable income on

Form 1041. They are deductible only for determining the

taxable estate for federal estate tax purposes on Form

706.

Medical and dental expenses of a decedent. The

medical and dental expenses of a decedent paid by the

estate aren't deductible in figuring the estate's taxable income on Form 1041. You can deduct them in figuring the

taxable estate for federal estate tax purposes on Form

706. If these expenses are paid within the 1-year period

beginning with the day after the decedent's death, you can

elect to deduct them on the decedent's income tax return

(Form 1040 or 1040-SR) for the year in which they were

incurred. See Medical Expenses under Final Income Tax

Return for Decedent—Form 1040 or 1040-SR, earlier.

Credits, Tax, and Payments

General business credit. The general business credit is

available to an estate involved in a business. For more information, see Pub. 334.

Tax

You can't use the Tax Table for individuals to figure the estate tax. You must use the tax rate schedule in the Instructions for Form 1041 to figure the estate tax.

Alternative minimum tax (AMT). An estate may be liable for the AMT. To figure the AMT, use Schedule I (Form

1041), Alternative Minimum Tax—Estates and Trusts. Certain credits may be limited by any tentative minimum tax

figured on Schedule I (Form 1041), Part III, line 52, even if

there is no AMT liability.

If the estate takes a deduction for distributions to beneficiaries, complete Parts I and II of Schedule I (Form 1041)

even if the estate doesn't owe AMT. Allocate the income

distribution deduction figured on a minimum tax basis

among the beneficiaries and report each beneficiary's

share on Schedule K-1 (Form 1041). Also, show each

beneficiary's share of any adjustments or tax preference

items for depreciation, depletion, and amortization.

For more information, see the Instructions for Schedule I (Form 1041).

Payments

The estate's income tax liability must be paid in full when

the return is filed. You may have to pay estimated tax,

however, as explained below.

Estimated tax. Estates with tax years ending 2 or more

years after the date of the decedent's death must pay estimated tax in the same manner as individuals.

If you must make estimated tax payments for 2026, use

Form 1041-ES, Estimated Income Tax for Estates and

Trusts, to determine the estimated tax to be paid.

Generally, you must pay estimated tax if the estate is

expected to owe, after subtracting any withholding and

credits, at least $1,000 in tax for 2026. You won't, however,

have to pay estimated tax if you expect the withholding

and credits to be at least:

This section includes brief discussions of some of the tax

credits, types of taxes that may be owed, and estimated

tax payments reported on the estate's Form 1041.

1. 90% of the tax to be shown on the 2026 return, or

Credits

The percentage in (2) above is 110% if the estate's 2025

AGI was more than $150,000 (and less than 2/3 of gross

income for 2025 and 2026 is from farming or fishing). To

figure the estate's AGI, see the Instructions for Form 1041.

Estates are generally allowed some of the same tax credits that are allowed to individuals. The credits are

Publication 559 (2025)

2. 100% of the tax shown on the 2025 return (assuming

the return covered all 12 months).

29

The general rule is that the first estimated tax payment

must be made by the 15th day of the 4th month of the tax

year (whether calendar or fiscal). The estimated tax may

be paid in full at that time or paid in four equal installments

on the 15th day of the 4th, 6th, and 9th months of the tax

year, and the 1st month of the following tax year. If any of

these dates fall on a Saturday, Sunday, or legal holiday,

the payment must be made by the next business day. For

2026, a calendar year taxpayer's estimated tax payments

are due on April 15, 2026; June 15, 2026; September 15,

2026; and January 15, 2027.

For exceptions to the general rule, see the Instructions

for Form 1041-ES and Pub. 505, Tax Withholding and Estimated Tax.

A penalty may be charged for not paying enough estimated tax or for not making the payment on time in the required amount (even if there is an overpayment on the tax

return). Use Form 2210, Underpayment of Estimated Tax

by Individuals, Estates, and Trusts, to figure any penalty,

or let the IRS figure the penalty.

For more information, see the Instructions for Form

1041-ES and Pub. 505. Also, see Transfer of Credit for Estimated Tax Payments, later, for information regarding the

transfer of the estate's estimated tax payments to the beneficiary(ies).

Name, Address, and Signature

In the top space of the name and address area of Form

1041, enter the exact name of the estate used to apply for

the estate's EIN. In the remaining spaces, enter the name

and address of the personal representative of the estate.

Signature. The personal representative (or its authorized

officer if the personal representative isn't an individual)

must sign the return. An individual who prepares the return for pay must sign the return as preparer. You can

check a box in the signature area that authorizes the IRS

to contact that paid preparer for certain information. See

the Instructions for Form 1041 for more information.

When and Where To File

When Form 1041 (or Form 1040-NR if it applies) is filed

depends on whether the personal representative chooses

a calendar year or a fiscal year as the estate's accounting

period. Where Form 1041 is filed depends on where the

personal representative lives or has their principal business office.

When to

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