annuity with estate as beneficiary

client had an annuity with the Estate as beneficiary.

a. can an estate choose the 5yr deferral?

b. the executer filed for inheritance tax, which included the annuity. Taxes were paid and waivers received.
if he executer has the annuity company mail him a check made payable tot he estate, does the estate have to pay taxes again on the gain of the annuity?

Thank you,
Douglas



The insurance company will have to determine that. More likely it will require a lump sum distribution. Ordinary income tax will be due on the annuity gains, but it federal estate taxes will be paid by the estate, there might be an IRD deduction available on the estate income tax return to offset some of the taxes on the annuity gains.



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