inheritance tax and annuities
client passed away and left estate to her two children.
They filed an inheritance tax since the estate was over $675k in NJ for 2016. They included all the assets.
She had two annuities. The tax on the two combined would be approx. $23,600 (cost basis vs cash value)
a. since they paid the inheritance tax, which included the annuities, do they also have to pay the tax on the gain when they cash out of the annuities?
or…
Since they paid the inheritance tax, they can cash out of the annuities and not have to pay for the gains vs cost basis?
Thank you.
Douglas
Permalink Submitted by Bruce Steiner on Thu, 2017-02-23 21:08
There’s no basis step-up for annuities. However, they’ll get the benefit of the decedent’s basis for the annuities.
Permalink Submitted by Douglas Bauerband on Thu, 2017-02-23 22:46
does that mean that if the death benefit was 100k and the cash value was 90k at the time of death, they will only be taxed on the 10k?instead of being…the cost basis was 85k minus the 100k death benefit would be 15k to be taxed on?thank you,Doug