Legal Definitions - deduction in respect of a decedent

Definition: Deduction in respect of a decedent refers to the amount that can be subtracted from a deceased person's income for tax purposes. This deduction is not recognized on the decedent's final income-tax return because of the accounting method used, such as an accrued-interest expense of a cash-basis debtor.

Example: If a person dies and owes interest on a loan, the interest that accrued up until the point of death can be deducted from their income for tax purposes. This deduction is not recognized on the final income-tax return because it is not paid until after the person's death.

This deduction is important because it can reduce the amount of taxes owed by the deceased person's estate, which can ultimately benefit their heirs.