Generally speaking, property received as a gift, bequest or inheritance is not included in your income for tax purposes. However, that property later produces income, such as interest, dividends, rental, etc., that income is taxable to you.

In addition, there may be taxable consequences relating to amounts you inherit from retirement accounts owned by the decedent, such IRA’s and annuities. Thus, if you are a beneficiary of such an account, it is prudent to consult with your tax or financial advisor to discuss your distribution options.

With such retirement accounts, any amounts which are withdrawn (distributed) are subject to ordinary income tax. As a beneficiary on the account, it is possible to take only the minimum distributions required by law and therefore maximize the income-tax deferred growth of the funds.