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Wendy Reed
Wendy Reed, Enrolled Agent
Category: Tax
Satisfied Customers: 3346
Experience:  15+ years tax preparation and tax advice.
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As a result of a living trust of an individual who lived in ...

Resolved Question:

As a result of a living trust of an individual who lived in California and died in 2006, I am the beneficiary of $550,000.00. (I received the money in 2007). Her total estate was less than $1 million dollars. What kind of taxes do I owe on this money... I live in Nebraska.
Submitted: 9 years ago.
Category: Tax
Expert:  Wendy Reed replied 9 years ago.

Hello there,

Although there is inheritance tax in Nebraska, it is only on property of decedent that resided or owned property in Ne. If all of the property is from CA, it is not subject to NE inheritance tax. Also, there is no federal inheritance tax.

There will be no estate tax either, since the estate amount is under the exemption amount. (2 million).

The only tax that you may be required to pay is income tax, if any of the inherited funds represent pre-tax accounts, such as pension, 401k, IRA, etc. If this is the case, then these funds will be taxable to you as income in the same manner as they would have been to the decedent.

If you sell any property after the decedent's death that has appreciated since decedent's death, you will owe applicable tax on the gain, such as capital gain on real estate.

Let me know if you need additional information.

Wendy Reed and 2 other Tax Specialists are ready to help you
Customer: replied 9 years ago.
The $550.000.00 was as a result of her home that we sold at her death. She had lived in the same house for more than 40 years... how will i calculate capital gains?
Expert:  Wendy Reed replied 9 years ago.
If you inherited the home when she died, the basis of the home would have been the fair market value of the home at the date of her death. Your sale price minus selling expenses would be the "sale price", or amount of proceeds. The sale price minus basis is your capital gain or loss. Therefore if you sold the home right after her death, you probably will have a capital loss, not a gain.
Wendy Reed and 2 other Tax Specialists are ready to help you