You might want to become familiar with IRS publication 559 - http://www.irs.gov/pub/irs-pdf/p559.pdf
The inheritance itself - is not taxable income.
The non-qualified annuities will be taxed under the "income in respect of decedent" rules. However - as contributions to the annuity were deferred - the distribution would be your taxable income.
If that is a qualified annuity - it will be treated as retirement plan distribution.
For the distribution from the annuity - you will be sent the form 1099-R - http://www.irs.gov/pub/irs-pdf/f1099r.pdf - you need to verify that the administrator reported in the box 7 the distribution code 4 - Death - that will indicate that the distributed amount is not a subject of 10% penalty.
Generally, the entire interest must be distributed by the end of the fifth calendar year after the year of the owner's death unless the interest is payable to a designated beneficiary over his or her life or life expectancy.
If paid as an annuity, the distributions must begin before the end of the calendar year following the year of death.
To determine the taxable distribution - you need to deduct the basis - the amount paid by your aunt into the annuity from after tax funds.
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