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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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HOW DOES THE IRS TAX A SMALL INHERITANCE OF AROUND $20,000

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HOW DOES THE IRS TAX A SMALL INHERITANCE OF AROUND $20,000?

IRS does not tax inheritance unless the inheritance is distribution from a tax deferred account such as 401K, IRA, annuity or similar account.

 

 

Depending on the State the decedent was a resident of, inheritance may be subject to State inheritance tax.

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

Customer: replied 7 years ago.
The small inheritance is issued to us in "stock certificates". Some of the stock was oil stock in one of her retirement accounts in California. I live in Maryland. If I was taxed, how do they figure it - (value of date of death minus closing value)?

If the stocks are from her retirement account and you get a distribution from the retirement account than the amount is subject to income tax. If the stock is in retirement account than you cannot get the stock certificates. This would be held in the retirement account.

 

The tax will be on the value of the stock as of the distribution date if they are held in the retirement account.

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

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