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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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My wifes mother passed away in 2007, my wife is the

Customer Question

My wife''s mother passed away in 2007, my wife is the executor of the estate which has a value of about $150,000. Does she have to pay federal tax on this money or does the $1,000,000 exemption appy?
Submitted: 9 years ago.
Category: Tax
Expert:  Ed Johnson replied 9 years ago.


Any assets that are distributed may incure a so called gift and generation skipping tax to the extent that they exceed 1,000,000. The estate may be eligible for an additional 1 million. But it is safe to assume that your estate will owe no gift tax based on the 1 million exclusion.

However, there is another issue of estate income tax. If the executor disposed of peroperty and liquidated assets before paying out the inheritance, then the estate would have had income, and a form 1041 needs to be filed.