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Bill, Enrolled Agent
Category: Tax
Satisfied Customers: 3151
Experience:  EA, CEBS - 35 years experience providing financial advice
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My sister in S.C. died recently and left me a sizable, shared

Customer Question

My sister in S.C. died recently and left me a sizable, shared inheritance.I live in California. What will my tax situation be and is taxation applicable? The investment funds' interests and investment funds have already been taxed in S.C.
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Submitted: 7 years ago.
Category: Tax
Expert:  Bill replied 7 years ago.

You will not be subject to any estate taxes on the assets. If federal estate taxes are due (if her gross estate exceeded $3.5 million) then the executor should pay those taxes prior to making any distributions. SC no longer imposes an estate tax.


If the funds you are receiving consist of retirement accounts (such as an IRA, 401(k), 403(b)) then you will be subject to income taxes when you take distributions from the account. Generally, you will not be subject to income taxes on investment funds (depending on the asset) that are not in a retirement account when you receive them but when you sell them you may have to pay taxes if there have been gains since her date of death. If the investment funds were titled solely in her name, then your cost basis for determining future gain or loss would be the fair market value of the assets on her date of death.


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