Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax

Tax on $1,000,000.00 inheritance

Customer Question
tax on $1,000,000.00 inheritance...
tax on $1,000,000.00 inheritance
Submitted: 11 years ago.Category: Tax
Ask Your Own Tax Question
Answered in 6 hours by:
4/8/2006
Tax Professional: Christopher Phelps, Certified Public Accountant (CPA) replied 11 years ago
Christopher Phelps
Christopher Phelps, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,710
Experience: CPA, CFP, PFS, Tax Practitioner 21 Years, Member AICPA/CSCPA Tax/Financial Planning Committee Member
Verified

The U.S. does not have an inheritance tax. Thus, any inheritance you receive as a beneficiary is tax-free to you (assuming relevant estate taxes have been paid). In limited instances the U.S. government may attach beneficiary inheritances where the estate were subject to U.S. estate tax and failed to pay prior to distribution to the heirs.

However, should you ever inherit a tax-deferred account such as a 401(k) or pension account, any distributions you take would be subject to income tax the same as if the decedent owner took a distribution. This is called income in respect of a decedent (IRD). If you inherit tax-deferred accounts seek competent tax counsel as you have significant choices to make regarding titling of the accounts and required distributions. Of course any investment income generated by the inherited funds (once you receive it) would be subject to normal taxation.

Except for items of IRD (see above) your cost basis in inherited property will generally be equal to the fair market value as of the date of the decedent's death (unless an estate tax return is filed and the executor chooses an alternate valuation date). Accordingly, if you sell the property you will only be taxed on post-death appreciation. The heirs are automatically presumed to have held any inherited property more then one year, thus entitling you to long-term capital gains rates if you sell. Thus, the maximum Federal tax rate on gains on the sale of inherited property is15% (5% if the gain would otherwise be taxed in the 10% or 15% regular tax brackets).

Some states do tax inheritances however. If you tell me what state your a resident of and the state of residence of the decedent, I can indicate whether you may have a state inheritance tax issue.

Because it is impossible for me to identify and consider ALL the relevant facts, this advice is not intended or written to be used for the purpose of avoiding penalties, and cannot be used for that purpose.

Ask Your Own Tax Question
Ask Christopher Phelps Your Own Question
Christopher Phelps
Christopher Phelps
Christopher Phelps, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,710
2,710 Satisfied Customers
Experience: CPA, CFP, PFS, Tax Practitioner 21 Years, Member AICPA/CSCPA Tax/Financial Planning Committee Member

Christopher Phelps is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
My wife inherited a piece of rental property from a
My wife inherited a piece of rental property from a revocable trust that her parents had set up after her father and brother died her mom did an amendment that made her trustee and sole heir. Her mom … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Under the IRC, a taxpayer who inherits property gets an
Under the IRC, a taxpayer who inherits property gets an automatic, income-tax-free, step-up in basis for that asset. That is, the heir uses the property's value on the deceased's date of death (or 6 m… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Does DC have an inheritance tax for DC residence who receive
Does DC have an inheritance tax for DC residence who receive an inheritance from a residentof California? … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
726 satisfied customers
What is the tax schedule on inherited Stretch I.R.A for
what is the tax schedule on inherited Stretch I.R.A for children after their inheritance while they are still teenagers, before they reach 70 years of age? … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
What are tax rules for an inherited Roth IRA, GA, the
what are tax rules for an inherited Roth IRA JA: Since estate law varies from place to place, can you tell me what state this is in? Customer: GA JA: What documents or supporting evidence do you have?… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Question regarding taxation of partnership distributions and
Hi, question regarding taxation of partnership distributions and capital gains … read more
Richard
Richard
Tax Attorney
Doctoral Degree
4,310 satisfied customers
I have 160K from an inherited on demand IRA distribution for
Hello, I have 160K from an inherited on demand IRA distribution for 2016. My home is free and clear. My property taxes on it are 14K. I donated 25K to charity. Based upon these figures, I have no othe… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
726 satisfied customers
My son inherited a property in Romania from his ant who was
My son inherited a property in Romania from his ant who was German citizen. Does he has to pay inheritance taxes to Germany for the property inherited in Romania, because she was German citizen?… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
An inherited annuity I pay tax on but is the full amount
An inherited annuity I pay tax on but is the full amount combined with my income and taxed again? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I have inherited a property in California that is currently
I have inherited a property in California that is currently in escrow. How will I be taxed for the money I make on the sale of the property? … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
726 satisfied customers
We have two parties is sale of property they inherited .a
We have two parties is sale of property they inherited .a court based the amount at tax assessment of 156000 at their mom's death value was 84000 which is a 72000 gain. At a hearing a judge ordered a … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,217 satisfied customers
I took a distribution from an inherited IRA and I'm wonderin
I took a distribution from an inherited IRA and I'm wonderin if I have to make estimated tax payments on that amount? … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
I have remarried and have property and inheritance property
Hello, I have remarried and have property and inheritance property that I want to insure goes to my children and not my spouse. Should have done prenup but what are my options now? Married 2 years. … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
726 satisfied customers
Sold property in Maine that was an inheritance. Live in
Sold property in Maine that was an inheritance. Live in Ohio. What tax forms will dI recieve from irs and what information will be on forms. Wondering if inheritance will put me in higher tax bracket… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Has the tax rate on an inheritance for non residents
Has the tax rate on an inheritance for non residents recently been changed? Iv'e been told it is now 5% and no longer 30%.… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,463 satisfied customers
On what schedule of the Pennsylvania Inheritance Tax Return
On what schedule of the Pennsylvania Inheritance Tax Return do I list a piece of real estate where the deed listed the decedent as having a life estate in the property and his brother and daughter as … read more
Anne
Anne
Master Tax Preparer
1,328 satisfied customers
When inheriting money that is being distributed from a grant
When inheriting money that is being distributed from a grant willed by a relative in another country such as Italy what forms are involved in filing with the American IRS and is the inheritance tax fr… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
What is the current inheritance tax rate in Mass.? Is the
What is the current inheritance tax rate in Mass.? Is the minimum still $1million? Is that amount likely to change in the near future? (I heard on the TV today that Trump plans to eliminate the Federa… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x