Elderly mother died (CA resident). She was trustee of a revocable…

If there were estate taxes in 2010, the taxes would apply to a revocable trust distribution. Depending on the asset, there may be some income tax due. If this was a tax deferred annuity or an IRA for example, there would be tax implications for each individual beneficiary. The estate tax would not apply, but any asset that was growing tax deferred will be taxed at the IRS upon transfer. The growth on the asset would be taxed to each individual beneficiary upon distribution according to their tax bracket. If this is the case, I would recommend sitting down with a CPA, so as to avoid any issues with the tax.

I hope this has answered your question better. If you need further assistance, please let me know.

As you have explained it, and as I understand it (I may be way off because I have limited information) there should be no income taxes due from the distribution of the estate property. There may be some capital gains taxes if the home and the stocks have increased in value since the date of your mother's death, and your mother's estate may owe income taxes from any income during 2010, but usually, inherited assets are not subject to income tax. Income tax does not apply to inheritance--only estate and inheritance taxes do. As I understand your situation, there are no income taxes to be paid by the beneficiaries. I think it is a good idea to consult with your CPA, but I do not foresee there to be any income taxes do. After you have your share of the inheritance, and it provides income--meaning you invest the money and it produces income for you (like a rental house for instance) then you will have to pay taxes. However, the inheritance itself will not be subject to income tax.

Please let me know if I can clarify.

Thanks.