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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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I inherited deferred compensation of $85000 from my deceased

Resolved Question:

I inherited deferred compensation of $85000 from my deceased father and received a 1099-misc showing it in Box 7 as nonemployee compensation. We know that it is subject to income tax. Is it also subject to self emploment tax on Sch SE? does anyone have a citation to the Code or Regs or a PLR?
Submitted: 3 years ago.
Category: Tax
Expert:  Lev replied 3 years ago.

LEV :

Hi and welcome to Just Answer!

LEV :

Outstanding income paid a self-employed decedent is considered income in respect of decedent (IRD) - this is a taxable income, but it is not subject to self-employment tax. See for reference - DANGEROUS URL REMOVED?A2=aba-tax;TRyuKQ;20050310055628-0500

Customer:

Lev,

Customer:

I can not open this reference. Can you send it to me another way?

Customer:

Thank you, XXXXX XXXXX

LEV :

ira-distribution.com/ira-distribution-articles/income-in-respect-decedent.htm

LEV :

try copy this line and paste it into the address fileld of your browser.

LEV :

See IRS publication 559 - www.irs.gov/pub/irs-pdf/p559.pdf - 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 considered to be earned ratably over the partnership's tax year.

LEV :

So if the income received before the death - it is subject of self-employment tax. Income received after the death is not subject of self-employment tax.

Customer:

This is good news for me. Thank you so much.

Customer:

XXXXX XXXXX

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22838
Experience: Taxes, Immigration, Labor Relations
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