Pension - Simplified method

[PIGLEE]

What happens if a person receives a pension, and that pension has been using the Simplified Method to calculate the taxable amount for years. Client dies, what happens to the unused tax free pension? In the year of death, does he get the amount for that year only, or the balance of the unused tax free amount. There is a section on page 13-20 of The Tax Book the talks about Non-periodic payments, but not sure if that applies.

The client in this case is me. My husband received payments up to his death, I also got a Death Payment, of 6,000.00 that will be taxable. I have never come across this before.

[appelman]

If the distributions started after 1986,

the undistributed basis is a Tier 1 miscellaneous deduction (no 2% threshold) on the decedent's final return. If the distributions started earlier, there is generally no deduction for undistributed basis.

[oceanlovin'ea]

So Sorry

Piglee, I am so sorry to hear that your husband died. I didn't know about it. Did you mention it earlier and I just missed it?

Anyway, you have my condolences and my wishes that you and your family are adjusting well. It is never an easy time after we go through something like this. Be sure that we are all thinking of you and wishing you the best.

Linda, EA