Question

Jack was single and a cash-basis taxpayer. he passed away on june 10, 2022. which of the following would be included on jack's final form 1040?

A. interest earned prior to death and received after death.
B. gain or loss from a completed sale where payment was received by the decedent prior to death.
C. his share of income from an s corporation for the entire 2022 calendar year.
D. compensation for services rendered before death but received after death.

Answer 1

Interest earned prior to death but received after death (Option A) and compensation for services rendered before death, but received after death (Option D), are included in Jack's final Form 1040 income taxes. These are considered income in respect of a decedent, which is reportable on the decedent's final tax return.

Step-by-step explanation:

The question presented focuses on what would be included on Jack's final Form 1040, considering he was a single, cash-basis taxpayer who passed away on June 10, 2022.

The Form 1040 is used to report an individual's income taxes to the Internal Revenue Service (IRS) and involves various sources of income, deductions, and exemptions to calculate taxable income.

When dealing with a deceased individual's final tax return, we must distinguish between income that is reported on the decedent's final return and income that is considered part of the estate or trust and reported accordingly.

Option A, interest earned prior to death and received after death, would indeed be reportable on Jack's final 1040 since it is income in respect of a decedent; the right to receive this income had already accrued before Jack's death. Option B talks about a completed sale where the payment was received before death. This should be reported on Jack’s final Form 1040 as it is income that was realized before his passing.

For Option C, Jack's share of income from an S corporation, only the portion of income allocated to him up until the date of his death would be re portable on his final 1040.

Income allocated after his death would be attributable to his estate. Lastly, Option D, compensation for services rendered before death but received after death, is also included in Jack's final Form 1040 as it is income in respect of a decedent.

After considering the applicable tax rules, the correct option that is included in Jack's final Form 1040 is Option A and Option D: interest earned prior to death and received after death, and compensation for services rendered before death but received after death.

These reflect the income properly attributable to Jack before his death and are included in the total taxable income the IRS expects to see on his final income tax return.