Docstoc

Federal Income Taxes on Inheritances

Document Sample
Federal Income Taxes on Inheritances Powered By Docstoc
					Federal Income Taxes on Inheritances

In most cases, the Internal Revenue Service does not impose federal
income taxes on inheritances. Thus, recipients of large inheritances may
not have to pay income taxes on the value of their gifts. Instead,
Congress enacted tax laws imposing the federal income tax liabilities on
estates. Before executors or personal representatives of estates can
distribute their property, they must first calculate the gross value of their
estates and determine their income tax liabilities according to the taxable
value of their estates. Estates with sizeable assets and property may owe
federal estate taxes.

Thus, according to the federal tax laws, beneficiaries of inheritances are
not responsible for paying income taxes on the value of their
inheritances. However, the IRS will impose federal income taxes if the
estate distributes property to a beneficiary, and the beneficiary
subsequently sells it or disposes of it. If you inherit real property, the fair
market value of your inheritance when you receive it is not taxable to
you. If you later decide to sell it, you will have to pay federal income
taxes or capital gains taxes if you earn a profit from the sale. If you are
responsible for paying capital gains taxes, your tax liability is the
difference between the fair market value of the property at the time you
inherited it and the sales price. The IRS uses special tax basis rules to
establish the value of your inheritance and your corresponding income
tax liabilities. This is when seeking profession tax advice from a
certified public accountant may be useful.

Experienced estate planning attorneys Seattle WAof the Byrd Garrett
PLLC offers estate planning and business planning resources to residents
of Seattle WA. To learn more about these free resources, please visit
http://www.byrdgarrett.com today.




                                       1

				
DOCUMENT INFO
Shared By:
Categories:
Stats:
views:3
posted:1/19/2012
language:
pages:1
Description: In most cases, the Internal Revenue Service does not impose federal income taxes on inheritances.