Inheritance pay back

[thetaxman2200]

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.

[kathyc2]

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?

[Jiggers]

Someone receiving an inheritance doesn't pay any tax on that inheritance. The estate does.

[Bucky]

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

[Rapid Robert]

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.

[thetaxman2200]

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

[New York Enrolled Agent]

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.

[thetaxman2200]

Thank you for all the respones