Understanding Deductions in Respect of a Decedent: A Legal Overview

Definition & Meaning

Deductions in respect of a decedent (DRD) are income tax deductions that a cash basis taxpayer incurs before their death. However, these deductions are not paid until after the taxpayer has passed away. DRDs are reported on the decedent's federal estate tax return rather than on their final income tax return.

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Real-world examples

Here are a couple of examples of abatement:

(hypothetical example) A cash basis taxpayer incurred medical expenses in the year prior to their death but did not pay those expenses until after their passing. The executor of the estate can claim these medical expenses as DRDs on the estate tax return.

(hypothetical example) A decedent had outstanding business expenses that were incurred before their death. These expenses can be deducted from the estate's taxable income when filing the estate tax return.

Comparison with related terms

Term Definition Key Differences
Deductions in respect of a decedent Tax deductions incurred before death but paid after. Specifically relates to cash basis taxpayers.
Final income tax return The last tax return filed by a deceased taxpayer. Does not include DRDs, which are reported on the estate tax return.

What to do if this term applies to you

If you are managing the estate of a deceased cash basis taxpayer, ensure you identify any deductions incurred before their death. Gather all relevant documentation and consider using legal templates from US Legal Forms to assist with the estate tax return. If the situation is complex or if you have questions, consulting a legal professional is advisable.

Quick facts

  • Applicable to cash basis taxpayers only.
  • Must be claimed on the federal estate tax return.
  • Involves deductions incurred before death but paid after.
  • Helps reduce the taxable value of the estate.

Key takeaways

Frequently asked questions

They are tax deductions incurred before a taxpayer's death but paid after, reported on the estate tax return.