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emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3118
Experience:  IRS licensed Enrolled Agent and tax instructor
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Can you tell me if taxes are owed by a recipient of a

Customer Question

Can you tell me if taxes are owed by a recipient of a distribution from the living trust of a deceased relative?
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: Our mother has a trust account with approx. $100K. There are 4 sons that are heirs to that money. When a distribution is given to the sons, will they have a tax liability?
JA: Is there anything else important you think the Accountant should know?
Customer: Nothing I can think of
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

Generally inheritance is not taxable. But if the recipient inherits pre-tax retirement account like 401K or IRA, the distribution from the account will be taxable. Another example is income producing property like real estate or capital investment. Fair market value on day of inheritance is nontaxable but if the property generate interest or is letter sold with a profit, the recipient will have tax liability.

Living trust is just revocable trust that will end with the death of the owner so it will change how the inheritance is taxed/or not taxed.

Expert:  emc011075 replied 1 year ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?