Handling Prepaid Expenses at Death

Abstract

<p>Assets held until death, other than for assets producing income in respect of decedent,<strong>1 </strong>generally receive a new income tax basis at death.<strong>2 </strong>The basis of income in respect of<strong> </strong>decedent items, by contrast, is not adjusted at death, under the theory that the income is<strong> </strong>too close to being earned.<strong>3 </strong>Income in respect of decedent assets carry over the decedent’s<strong> </strong>basis into the hands of the heirs or other successor to the decedent.<strong>4</strong></p>