Legal Question in Wills and Trusts in New Jersey

Re: is it taxable

Your questions are legitimate, but they need to be answered by an accountant. Take all your IRS letters and estate info to a CPA and have your questions answered.

Re: is it taxable

Your facts are still deficient on a critical point. What type of account did your mother have? Was it a personal investment account created with after-tax dollars, or was it some form of retirement account like an IRA, tax-deferred annuity, SEP or KEOGH Account created with pre-tax dollars? From what you explain, it appears either (A) IRS has screwed up in some way, which can be corrected, or (B) its was some type of tax-deferred account. If it was a tax-deferred account, you became responsible for income taxes that were not paid by your mother, when she created to account. Thus, while inheritances are not usually taxable income to the recipient, if the recipient inherited a tax-deferred asset, they would be responsible for the deferred income taxes. Since the receipt of this type of account is considered to be "ordinanry income", like interest on a savings account, the amount received is added to all of your other income and taxable at the tax bracket applicable to your net taxable income. Contact me directly if you need more information or assistance.