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I received money from an inheritance on January 3 2018 but…

I received money from...

I received money from an inheritance on January 3 2018 but the K-1 forms from the family accountant are dated 2017 ,,, what year do I report this money on my tax returns?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

The house of my deceased mother sold July 7, 2017 but the receipt and release contract was not mailed out until December 2017 and when all siblings signed I did not get and deposit money until Jan 3 2018

Accountant's Assistant: Is there anything else the Accountant should be aware of?

Not really...I have looked up IRS Policy and unless I deliberately opted to not take my inheritance sooner then it should fall under 2018 tax returns ...

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Answered in 1 minute by:
3/23/2018
Chad EA, CFP ®
Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 2,162
Experience: Federally licensed IRS Enrolled Agent, Certified Financial Planner (R), MBA
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Hello!

My name is***** will assist you today.

Please give me one moment while I review your question and type my initial response

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Generally, inheritances are not taxable, but this is not always the case.

You are correct that If you did not receive the funds in 2017 then you would claim any distribution (even if taxable) until you are in constructive receipt of the funds.

For federal income tax purposes, the doctrine of constructive receipt is used to determine when a cash-basis taxpayer has received gross income. A taxpayer is subject to tax in the current year if he or she has unfettered control in determining when items of income will or should be paid.

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This information is contained in IRS Publication 538 and 26 CFR 1.451-2 Constructive receipt of income.

I have placed the relevant links and excerpts below.

https://www.irs.gov/publications/p538​

https://www.law.cornell.edu/cfr/text/26/1.451-2

"Constructive receipt.

Income is constructively received when an amount is credited to your account or made available to you without restriction. You do not need to have possession of it. If you authorize someone to be your agent and receive income for you, you are considered to have received it when your agent receives it. Income is not constructively received if your control of its receipt is subject to substantial restrictions or limitations."

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Customer reply replied 29 days ago
that is what I thought but the accounting firm has reported the K-1 to the IRS for the year 2017. I received the K-1 form a few days ago.

The accounting firm may have released the funds in 2017 and then you may not have received the funds until 2018

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Customer reply replied 29 days ago
The funds were controlled by the executor but did not mail out the receipt and release form till December 2017

That makes sense

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The accounting firm would issue the K-1 based on when they sent the funds.

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Customer reply replied 29 days ago
can I relegate the inheritance to 2018 in your opinion?

You will definitely want to keep notes that you did not receive the payment until 2018.

It is my opinion, that as a cash basis tax payer, you will not claim any inheritance (if taxable at all) until 2018 because you did not receive the funds until 2018.

Chad EA, CFP ®
Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 2,162
Experience: Federally licensed IRS Enrolled Agent, Certified Financial Planner (R), MBA
Verified
Chad EA, CFP ® and 87 other Tax Specialists are ready to help you
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Category: Tax
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