Question

Three weeks after Abed died, his brother Tony properly received Abed’s last paycheck from his employer. The gross amount of the check was $4,000, and a $300 deduction for state income taxes was subtracted in computing the net amount of the payment. Which of the following statements is true? a.It is deductible on both Tony's income tax return and on Abed's estate tax return.b.It is deductible on neither Tony's income tax return nor on Abed's estate tax return.c.It is deductible only on the income tax return of Abed's estate.d.It is deductible only in computing Abed's taxable estate.

Answer 1

C) It is deductible only on the income tax return of Abed's estate.

Step-by-step explanation:

Even after you die, the IRS will still require that the income taxes from the deceased person are filed (until the date of his/her death).

In this case, Abed's estate must file income taxes including this last check. Tony received the check, but he didn't work, the company is paying for Abed's work.

If Abed was actually rich and left over $11.2 million, then this last salary will also be taxed by the estate tax.

Answer 2

The best answer is "A"

It is deductible both on Tony's income tax return and on Abe's estate tax return