From intuit web website:
Decedent's Estates
The estate of a deceased person is a taxable entity that exists until all debts are paid, if possible, and assets have been distributed to heirs and other beneficiaries of the decedent. The income earned from the assets of the estate during the period of administration or settlement, which is usually no more than 3 years but can be much longer in some cases, is subject to tax. Generally, property received by the beneficiary of an estate, valued on the date of a decedent's death, is not taxable income to the beneficiary (with the exception of Income In Respect of a Decedent (IRD)items). However, any income accruing after the decedent's death will be taxed to whomever realizes the gain. Therefore, income received by the estate will be taxed either to the estate (if not distributed in the year that the income was received) or to the beneficiary. In addition, capital gains realized by the estate are ordinarily taxed to the estate. Income distributed must be reported on the beneficiary's income tax return and is allowable as a deduction for the estate .
