Inheritance ?

[Eli]

Am i correct in thinking that a $10,000 cash inheritance is not taxable to the recipient?
what I've read so far seems to indicate this.

Thanks!!
Eli

[Joe Btfsplk]

Inheritance

An inheritance is NEVER taxable to the recipient. It could be taxable to the Estate of the decedent if it exceeds $ 2 million. Also a $ 10000 gift would not be sufficent to require filing a gift tax return.

[Eli]

Thanks...

Joe, for that quick response.

Eli

[Unregistered]

An inheritance is NEVER taxable to the recipient. It could be taxable to the Estate of the decedent if it exceeds $ 2 million. Also a $ 10000 gift would not be sufficent to require filing a gift tax return.

Not true—Never say Never--annuities, IRA's-- just to name a couple

[Jiggers]

Agree, never say never

I told a client who received a distribution from an estate that the money was not taxable. However, after the return was filed, and before April 15th of that year, she received a K-1. It seems that this money was the income from investments and was being passed through to her as the beneficiary so that that estate/trust didn't pay taxes. It also turned out that the estate of her husband was converted to a trust, per the terms of the will, and was controlled by her husband's son from a prior marriage and that is where the funds came from.

[Joe Btfsplk]

Not true—Never say Never--annuities, IRA's-- just to name a couple

Well, I should have said it was not subject to Estate tax or gift tax. A tax-deferred IRA would be an equine of a differnet hue.

All comments are subject to the overriding law which states that "only death and taxes are certain," so if you die without paying the defered tax, someone has got to make sure Uncle Sam does not get cheated out of his share of the goodies.

[JAinNC]

I think it is best to say:" It depends on many things" They may need to get information from the exucutor of the estate or attorney. That doesn't mean they will get a correct answer but they won't get the wrong one from me -- not in this area anyway.
If a Fiduciary return has to be filed, some could be taxable.

[Eli]

The money came...

from the sale of the deceased's residence. There were several benefactors each receiving 10,000. The residence was sold at 240,000. Not sure what other info might be needed.

Thanks!

Eli

[jainen]

Never say Never

>>Never say Never--annuities, IRA's<<

I disagree with our unidentified correspondent. Inheriting a retirement fund is NEVER a taxable event.

Subsequent distributions from the fund might be taxable, but that was not Eli's original question or Joe's answer.

[Unregistered]

Joe's original answer was

An inheritance is NEVER taxable to the recipient

which I will repeat. Never say Never.

[DaveO]

Never say Never is always good advice

One of the most bizarre cases I have ever worked on began with, “My husband received a check for $25,000 when his grandmother died, Is this taxable?” I replied that a cash gift usually isn’t, but it would depend on the facts. I advised her to ask about the source of the money and if a K-1 would be forthcoming. The husband concealed the K-1 from grandma’s trust when it arrived. He then left, divorced her and died. Two years later the letter from the IRS arrives.

[Bees Knees]

>>Never say Never--annuities, IRA's<<

I disagree with our unidentified correspondent. Inheriting a retirement fund is NEVER a taxable event.

Subsequent distributions from the fund might be taxable, but that was not Eli's original question or Joe's answer.

Sometimes the only way you can inherit a retirement fund is to accept a distribution. For example, if the decedent was already receiving RMD, then you HAVE to take a distribution upon inheriting the fund. So it MAY be that saying it is NEVER a taxable event MIGHT NOT always be true.

Can we confuse and nit pick the issue any further?