Inheritance/Estate

[ILLMAS]

TP recieved part (aprox. 70K) of an inheritance in 2009, she is pending to recieve more once her aunt's house is sold. She brought in all the legal documents and I see that an estate has been created by the attorney, according to her she has not recieved any documents regarding the estate return and she wants to declare in her 2009 return anything that is taxable on her inheritance. I haven't had a case like this before, can someone guide me or give me reference to a pub. to look at.

Thanks

MAS

[TAXBILLY]

The attorney is the only one that can answer the question as to whether a K-1 will be issued and/or when.

taxbilly

[kcjenkins]

Well Pub 950 would be a starting place. Basically, anything she inherited is tax free to her, as of DOD, but any income or interest earned between the DOD and the date she gets it is taxable. So if, for example, she inherited jewelry, that's not taxable, but she should get it appraised, so that when she sells it or gifts it to someone, she knows what her basis is. If she inherited cash in the form of a 1 yr CD, that matures in 6 months, the interest it has earned at DOD is part of her basis, but the interest it earns for the next six months is income when she cashs it. If she inherited a farm, the farm is tax free, but if there are crops growing on it, the sale of those crops will be taxable income to her. Determining her basis in the crops might be a bit tricky.