Any experts in here know if an Estate bank account can be distributed to an Inherited IRA or some other way to delay taxes owed? Or is there no way around it, bite the bullet and distribute it to my sister and I and each pay our taxes?

Ugh it's late and I worked too hard today, sorry! Actually some of the account contains proceeds from selling property so that complicates things a little. We would have to pay taxes on the gains of the sale.

FourAggies said:

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Beneficiaries get a step up in cost basis (free of taxes) to the current market price. If you've sold the property as a part of monetizing or liquidating the estate, you should owe no taxes. If for some reason the sale of the property is a long time after the death of the prior owner, then you may owe taxes on the difference between the date of sale and the date of death.

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This is correct.

We need more info - what property was sold and how long ago did the decedent pass?

If you're worried about paying taxes on an estate, congratulations, you're rich. But they do have decent tax attorneys you know, some are even Aggies.

It's extremely unlikely the beneficiaries will owe any taxes. As others mentioned the property gets a step up in cost basis on the date of death, and I think there is a way to for the exector to set the value from 6 months after the death in the case the property increased in value from the time of death to the time of sale.

You can also write off closing costs, realtor commissions etc against the sale price so you will likely sell it at a capital loss.

This sale will be reported on the estates tax return.

OldArmyCT said:

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If you're worried about paying taxes on an estate, congratulations, you're rich. But they do have decent tax attorneys you know, some are even Aggies.

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Unless the inheritance is in a pre-tax qualified account. Then the beneficiaries will have to pay the taxes.

A. G. Pennypacker said:

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OldArmyCT said:

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If you're worried about paying taxes on an estate, congratulations, you're rich. But they do have decent tax attorneys you know, some are even Aggies.

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Unless the inheritance is in a pre-tax qualified account. Then the beneficiaries will have to pay the taxes.

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That is pretty straight-forward for all inherited IRA's, one has to assume OP is talking about NQ dollars.

The only (likely) scenario where the beneficiary will owe taxes is on pre tax retirement accounts or on gains earned from the date of death until liquidation due to the step up.

There's not step up on irrevocable trusts but that doesn't seem to be the situation here.

So if this was just property that was sold and is being dispersed there should be very little if any taxes to worry about other than perhaps some small interest earned while money was in the estate account.