EST2606. Death, Taxes, and the Business Entity: Fiduciary Income Tax Traps When an Owner Dies

When a business owner passes away, income tax issues extend well beyond the final individual return. As ownership interests transition to an estate or trust, fiduciary income tax considerations quickly come into play while entity‑level income continues. This session examines the fiduciary income tax issues that commonly arise following the death of a shareholder or partner, including income allocation between the decedent and the estate, basis adjustments, income in respect of a decedent (IRD), and entity‑specific considerations for S corporations and partnerships. Participants will leave with practical insights into common pitfalls, planning opportunities, and coordination challenges faced by fiduciaries and their advisors when administering business interests after death.

Learning Objectives:

• Identify key fiduciary income tax issues that arise upon the death of a shareholder or partner, including income in respect of descendent (IRD), income allocation, and basis considerations.
• Distinguish between the post-death income tax treatment of corporate stock and partnership interests, including the impact of §754 elections and fiduciary shareholder rules.
• Apply practical planning strategies to minimize fiduciary income tax exposure and avoid common administration mistakes when estates or trusts hold business interests.