[Code of Federal Regulations]
[Title 26, Volume 8]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.691(a)-3]

[Page 333-334]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.691(a)-3  Character of gross income.

    (a) The right to receive an amount of income in respect of a 
decedent shall be treated in the hands of the estate, or by the person 
entitled to receive such amount by bequest, devise, or inheritance from 
the decedent or by reason of his death, as if it had been acquired in 
the transaction by which the decedent (or a prior decedent) acquired 
such right, and shall be considered as having the same character it 
would have had if the decedent (or a prior decedent) had lived and 
received such amount. The provisions of section 1014(a), relating to the 
basis of property acquired from a decedent, do not apply to these 
amounts in the hands of the estate and such persons. See section 
1014(c).
    (b) The application of paragraph (a) of this section may be 
illustrated by the following:
    (1) If the income would have been capital gain to the decedent, if 
he had lived and had received it, from the sale of property, held for 
more than 1 year (6 months for taxable years beginning before 1977; 9 
months for taxable years beginning in 1977), the income, when received, 
shall be treated in the hands of the estate or of such person as capital 
gain from the sale of the property, held for more than 1 year (6 months 
for taxable years beginning before 1977; 9 months for taxable years 
beginning in 1977), in the same manner as if such person had held the 
property for the

[[Page 334]]

period the decedent held it, and had made the sale.
    (2) If the income is interest on United States obligations which 
were owned by the decedent, such income shall be treated as interest on 
United States obligations in the hands of the person receiving it, for 
the purpose of determining the credit provided by section 35, as if such 
person had owned the obligations with respect to which such interest is 
paid.
    (3) If the amounts received would be subject to special treatment 
under part I (section 1301 and following), subchapter Q, chapter 1 of 
the Code, relating to income attributable to serveral taxable years, as 
in effect for taxable years beginning before January 1, 1964, if the 
decedent had lived and included such amounts in his gross income, such 
sections apply with respect to the recipient of the income.
    (4) The provisions of sections 632 and 1347, relating to the tax 
attributable to the sale of certain oil or gas property and to certain 
claims against the United States, apply to any amount included in gross 
income, the right to which was obtained by the decedent by a sale or 
claim within the provisions of those sections.

[T.D. 6500, 25 FR 11814, Nov. 26, 1960, as amended by T.D. 6885, 31 FR 
7803, June 2, 1966; T.D. 7728, 45 FR 72650, Nov. 3, 1980]