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    Inheritance pay back

    Hello hope everyone is surviving the last rush.

    My question is this - I have a client who back in 2014 received an inheritance which they did pay tax on, however last year 2017 - they had to pay a portion of this back, due to was contested. I am not sure how I need to handle this, do I amend the 2014 return or there another way for me to handle this? any help is appreciated.

    #2
    Originally posted by thetaxman2200 View Post
    Hello hope everyone is surviving the last rush.

    My question is this - I have a client who back in 2014 received an inheritance which they did pay tax on, however last year 2017 - they had to pay a portion of this back, due to was contested. I am not sure how I need to handle this, do I amend the 2014 return or there another way for me to handle this? any help is appreciated.
    I'm assuming you are talking about a state inheritance tax?

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      #3
      Someone receiving an inheritance doesn't pay any tax on that inheritance. The estate does.
      Jiggers, EA

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        #4
        Possibly he is talking about 1041 income passed thru on K-1 form.

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          #5
          Originally posted by Bucky View Post
          Possibly he is talking about 1041 income passed thru on K-1 form.
          That's what I thought too -- to a layperson, that would seem like an inheritance.

          To OP: Look for "claim of right" in IRS pubs of TheTaxBook.
          "You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard

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            #6
            Actually was not on a 1041. Was received on a 1099 R. However the Client had to pay a portion of this back to the step mom after the distribution was contested in court. I never seen this before and why I am asking for help.

            I appreciate all that have answered.

            Thank you in advance

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              #7
              Originally posted by thetaxman2200 View Post
              Actually was not on a 1041. Was received on a 1099 R. However the Client had to pay a portion of this back to the step mom after the distribution was contested in court. I never seen this before and why I am asking for help.

              I appreciate all that have answered.

              Thank you in advance
              Sounds like a repayment.

              Go to page 33 of Pub 525 for a pretty decent discussion.

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                #8
                Thank you for all the respones

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