How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Stephen G. Your Own Question
Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7092
Experience:  Extensive Experience with Tax, Financial & Estate Issues
Type Your Tax Question Here...
Stephen G. is online now
A new question is answered every 9 seconds

Inherited funds from an estate that did not earn income.

Customer Question

Inherited funds from an estate that did not earn income. Estate was424000. Divided between 3 soblings. Do we have to claim this as income or does it fall under class a.
Submitted: 1 year ago.
Category: Tax
Expert:  Stephen G. replied 1 year ago.

Inheritances aren't subject to income tax; it has nothing to do with relationship class the recipient is in; that only has to do with the application of the Inheritance Tax.

Customer: replied 1 year ago.
Why then when I went to my accountant did he file a k1 and I end up owing approx $40000 on the $141000 I inherited? He hasn't filed it yet ...
Expert:  Stephen G. replied 1 year ago.

Well, you said that there was no income in the estate, but you didn't say what the estate consisted of. It must have included some "Income in Respect of a Decedent" which would mean that there was an probably an IRA or Annuity or something similar in the estate that the decedent hadn't paid any taxes on as of his/her date of death. In those cases the beneficiaries has to pay the income taxes.

What were the nature of the assets in the estate?

Customer: replied 1 year ago.
Ira and annuities. Total estate was 422000. The Ira and annuities were bequeathed to a trust
Expert:  Stephen G. replied 1 year ago.

Well, that's your answer as I suggested. There has been no income tax paid on those assets.

Customer: replied 1 year ago.
Even annuities ? I Was hoping all the loop holes for estates would apply to annuities.
Expert:  Stephen G. replied 1 year ago.

What "loop holes"?

If the Trust had paid the taxes it would have been at the 39.6% rate or a total of over $160,000.

Customer: replied 1 year ago.
correct it is now passed on to the beneficiaries, that will pay according to their tax rates. You helped a lot thank you!
Expert:  Stephen G. replied 1 year ago.

OK, great. Please remember to rate my response.

Thanks very much,

Steve G.