Generally, installment sales contracts are reported the same
as they were reported by the decedent. The beneficiary reports the same gross profit
percentage and interest income as the decedent would have reported.
When assets pass from a deceased to a beneficiary, some assets
receive a step-up-in-basis and some asset do not receive the step-up-in-basis. For
asset where the deceased deferred income for tax purposes, the beneficiary does
not receive a step-up-in-basis, but rather is put in the same position as the decedent.
This is referred to as Income in Respect
of a Decedent, click here for IRS publication 559
(see page 9) Survivors, Executors, and Administrators.
