- quote -

Not True. The taxable portion is taxed at the recipient's,
i.e., the beneficiary's, marginal tax rate.

- quote -

No. An inherited annuity is considered Income in Respect of
a Decedent (IRD). The decedent's cost or basis carries over
to the beneficiary. Report the gross distribution on line
16a and the taxable amount on line 16b. If any income tax
was withheld, claim that on line 64.

Frederick Lorca

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My step-mother received a 1099-R from Hartford for a
Lump-sum amount she inhereted from her Dad showing both the
payout and the taxable amounts being the same amount. There
was some foul-up in that Hartford did not know what her Dad
had paid for the annuity. She told them and evidently
Hartford was going to update the taxable amount to be the
difference between the payout amount and what he had paid
for it. I think the reasoning at Hartford was that he had
already paid taxes on the money he paid for the annuity, but
the gain between what he paid and the payout amount hadn't
had taxes paid on it.

He did not receive payments from the annuity. Hartford
calls it an Individual Non-Qualified Annuity Contract (Other
than a Spouse Named as Sole Beneficiary).

I have never dealt with death benefit taxes. Line 16a and
16b on the 1040 deal with them but seem more oriented to the
person with the annuity who receives regular payments.

I heard that annuity death benefits were only taxed at 10%,
but I can't find anywhere else on the 1040 that the income
(annuity value minus the annuity cost) would be entered.

Also, isn't the beneficiary's basis in inherited property
the fair market value at the time of death. If that's the
case here then would there be little or no tax on the
lump-sum distribution?

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ------------------------------------------------------- >