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This is a question about US taxes and accounting.

The documentation I've read says that if an estate is run on a cash accounting system, then any income received after the decedent's date of death is income that belongs to the estate and is therefore to be reported with the estate's tax filing. Anything before the date of death is filed with the decedent's last tax return.

Is this also true for a sales transaction where the sale terms were completed on paper prior to the date of death but the actual proceeds were not received until after the decedent passed?

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    I suspect this depends on state law, and i'd suggest asking an estate or real-estate lawyer in your area.
    – keshlam
    Mar 27, 2015 at 2:13
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    @keshlam estate and real-estate are entirely different and unrelated things.
    – littleadv
    Mar 27, 2015 at 4:54
  • @littleadv: true but this question is both areas of law and I'm not sure which would be better able to provide a definitive answer. If either.
    – keshlam
    Mar 27, 2015 at 5:22
  • I don't see anything about real-estate in the question, sorry
    – littleadv
    Mar 27, 2015 at 5:26
  • Sorry guys, the sale transaction was related to real estate but I left that out of the question because I realized this was really more about accounting. I should have removed any inappropriate tags.
    – Bernard Dy
    Mar 27, 2015 at 11:52

1 Answer 1

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Is this also true for a sales transaction where the sale terms were completed on paper prior to the date of death but the actual proceeds were not received until after the decedent passed?

Yes. That's exactly the case you described in your first paragraph. The cut-off date is the date when the death occurred, any outstanding debt becomes an asset of the estate and any payment on the debt received after that is income to the estate.

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  • I am a little puzzled as to why the payment of the debt is income to the estate since the estate is merely receiving cash for what is reported (on the estate tax return) as an asset of the estate. Mar 27, 2015 at 13:33
  • @DilipSarwate if its a cash-based tax payer, then the income is not recognized until the cash is actually received.
    – littleadv
    Mar 27, 2015 at 22:06

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