My wife was in a two-person business partnership. She died in September. As her heir, I was given her share of the partnership's remaining cash on hand. Is it taxable?

[RHam]

The surviving partner told me this money had already been taxed in previous years and therefore would not be taxable now.  Is this true?

[IreneS · Accepted solution]

I'm sorry for your loss.

No.  According to the IRS Pub. 541 - Partnerships, the cash you received from the partnership is considered a distribution and is not taxable as long as the amount you received does not exceed your wife's adjusted basis in the partnership (which it probably doesn't).

[RHam]

Thank you!