Rev. Rul. 55-229

A lump sum payment to a Federal Government employee upon separation from the service for accumulated or accrued annual leave represents salary or compensation for services rendered and is includible in gross income for Federal income tax purposes. See I.T. 3969, C.B. 1949-2, 13. The death of such an employee and the receipt by his widow or other beneficiary of such lump sum leave payment does not change its nature and identity. See the Act of August 3, 1950, 64 Stat. 395, 5 U.S.C. 61f, 61g. Therefore, where such income is not properly includible in the gross income of the decedent for the taxable period in which falls the date of the decedent's death and the right to receive the amount due is acquired by the widow or other beneficiary, or by the decedent's estate, the lump sum payment is includible in the gross income of the recipient in the taxable year received, under the provisions of section 691(a) of the Internal Revenue Code of 1954