Generally, an inheritance received by a beneficiary is not taxable or reportable at all on the beneficiary recipient's tax return. There are exceptions though; especially when dealing with a tax deferred retirement account of the deceased. For the most part, all taxes are paid by the estate, and whatever is left is what gets distributed to the beneficiaries.
There are some scenarios where the beneficiary may prefer to pay any taxes on their personal tax return though. But I don't know enough about it to provide any example scenarios.
Overall, it depends on exactly what you're dealing with here, be it a tax deferred retirement account, off-shore annuity, or something else of that nature.
