I
believe that you are talking about PA inheritance tax form 1500, not individual
tax returns (1040 or PA40). It appears
as though those funds may be subject to the PA inheritance tax and should be
reported on Schedule E of the PA 1500 inheritance tax form. I have included the instructions from the schedule E below. To be sure, I would suggest contacting the PA
inheritance department 717-787-8327
(see screen shot) to get clarification.If they are reportable on the PA 1500, the executor would have to file a revised 1500..
From the instructions -
Litigation Proceeds Received
Report proceeds received by an estate representative for any personal
injury claim instituted by the decedent prior to
the decedent’s date of death.
Report any proceeds received from a settlement of a wrongful
death/survival action claim instituted and paid to the
estate representative after the decedent’s date of death.
Include the date the monies were received by the estate on the
schedule.
All personal injury claims instituted prior to the decedent’s date of
death and funds allocated to the survival action as
part of a wrongful death/survival action claim are subject to
Pennsylvania inheritance tax.
Important. A copy of the petition filed
with the court for the approval of the settlement and/or allocation, and
a copy of the signed court order must be attached.
If the Department of Revenue has previously reviewed and accepted the settlement,
attach verification. In cases
where structured settlements have been accepted or there is an agreement
to provide payments for a number of years, it will be necessary for the estate
to submit information sufficient for the department to calculate the present
value of such distributions. Note. Only the decedent’s spouse, child or parent can institute a wrongful
death claim.
http://www.revenue.pa.gov/FormsandPublications/FormsforIndividuals/Documents/Inheritance%20Tax/rev-1...
