[Anonymous]

Hi all,

I just finished R4 and I’m a little confused as to if there is any difference between inherited property and estate distributions. For some reason, I remember inheritances being nontaxable to the recipient, but I know for estate distributions the distribution is taxable to the beneficiary is limited to the lower of the estate’s DNI or the actual distribution amount.

Is there any difference between these 2 concepts, and if so what is it? Thanks for the help! 🙂

[accountabergs]

I think the estate is taxed on the distribution, not the beneficiary. Take a look at the pass key at the bottom of R4-70.

Passed in 2014

FAR- (5/27) 88
REG- (2/20) 70, Rematch: (7/2)83
BEC- (4/2) 85
AUD- (4/24) 87

Using Becker live classes and online materials

"if you get confused, listen to the music play"

[Anonymous]

I think the main two differences are exactly what you said: Inheritances are not taxed (therefore not income) and Estate distributions are taxed to the beneficiary as the lesser of DNI or actual distribution.

Another concept for inheritances is how you value the inheritance. FMV at date of death / AVD / distribution date….whichever is chosen or whichever is earlier.

[Author]

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