received a IRA cd after friend died
In late 2006 a friend died and did not mention me in her will. In 2007 a bank called me and had a check for me that was for a cd that the friend put my name on. Now I have received a 1099-r from the bank that states I received a distribution from a IRA. Do I have to report this as income or is it a gift? I had no idea this cd had me as a beneficiary. If I have to report is as a distribution where do i put it. Thanks
Permalink Submitted by Alan Spross on Thu, 2008-01-31 21:21
You apparently inherited a CD IRA and cashed it in. You did not have to cash it in and could have taken annual minimum distributions from the account instead. In any event, the amount on the 1099R is fully taxable as ordinary income. You report it on line 15a and 15b of Form 1040.
The reason you are taxed on this is that since it was an IRA, your friend never paid taxes on it. Taxes are due on distribution. This is true of most retirement plans and annuities.