Contract Sale, Seller dies

[neilbrink]

My client was in the middle of a 20 year contract sale for farmland that she sold when she died this year. The buyer will pay off the remaining amount of the contract to the estate. Can someone tell me if the basis in the property is still the basis listed in the contract, or will the estate (and ultimately the beneficiaries) receive the modified stepped up basis of the remaining value of the farmland not yet paid off? Thanks. Neil

[OldJack]

No step-up and the gain received is taxable in the same classification and manner as was before the death.

[Pacun]

"Transfer of an Installment Obligation at Death – A transfer of an installment obligation at death is not a

disposition of the note for tax purposes. Rather, the income is reportable by the estate or beneficiary who receives

the note in the same manner as if the decedent had lived (this results in “income in respect of a decedent,”)"

[neilbrink]

Thanks.