INHERITED "CASH" - Taxable ?

[MARV]

Two different clients received "cash" as an inheritance.

Is it reportable and taxable?

Problem: No paper work given to clients (other than the check) by the attorneys but was told that the "estate paid the tax for them" according to the client.

What am I missing here?

[KJ Judd]

Inheritance is not taxable income. If your client receives a Schedule K-1 reporting income from the estate to him that is taxable. The attorney must mean any Estate tax needed has been paid.

[MARV]

TheTaxBook page 3-17

I got confused reading page 3-17 where it mentions "taxable".

Trying to see what you say as not taxable UNLESS SCH K-1 issued - that we know - but can't find where if NO k-1 that it is not taxable

[OldJack]

Estate tax on inheritance is paid by the estate before distribution. Inheritance is therefore tax-free to the person receiving the inheritance. Taxable income that the estate earns from date of death until distribution must be reported by someone and they pay income tax on the earnings. That would be the estate or the beneficiary if the estate passes the tax liability it to the person by giving them a 1041-k1 showing the amount taxable.

[MARV]

THAT'S IT Thank you Old Jack

That is the best of the replies that was simple and concise. Should be incorporated in the TAX BOOK


Thank you

[Bees Knees]

I got confused reading page 3-17 where it mentions "taxable".

Trying to see what you say as not taxable UNLESS SCH K-1 issued - that we know - but can't find where if NO k-1 that it is not taxable

Where on page 3-17 does it say inheritance is taxable?

I see where it says inherited property is taxable if it is income in respect of a decedent, but I do not see any other kind of inhertied property listed as being taxable.