Medical savings accounts (MSAs).
The treatment of a medical savings account (MSA), including a Medicare+Choice MSA, at the death of the account holder depends on who acquires the interest in the account. For details, see the discussion of MSAs under How To Report Certain Income and Income in Respect of the Decedent, later.

Accelerated death benefits.
Certain payments received under a life insurance contract on the life of a terminally or chronically ill individual before the individual's death (an accelerated death benefit) can be excluded from income. For more information, see Accelerated Death Benefits, later.

Consistent treatment of estate and trust items.
Beneficiaries must generally treat estate items the same way on their individual returns as they are treated on the estate's return. For more information, see How and When To Report under Distributions to Beneficiaries From an Estate in Publication 559, Survivors, Executors, and Administrators.

65-day rule for estates.
The personal representative can elect to treat distributions paid or credited by the estate within 65 days after the close of the estate's tax year as having been paid or credited on the last day of that tax year. For more information, see Distributions to Beneficiaries From an Estate in Publication 559.

Estates and beneficiaries treated as related persons for disallowance of certain items. An estate and a beneficiary of that estate are treated as related persons. Various tax provisions are affected by this change, including the one that denies a deduction for a loss on the sale of an asset between the parties. This does not apply to a sale or exchange made to satisfy a pecuniary bequest.

For more information, see Income To Include and Losses under Income Tax Return of an Estate--Form 1041 in Publication 559.

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