You do not need to report the inheritance, but you do need to report any distributions from the IRA reported to you on a 1099-R.
A beneficiary can be any person or entity the owner chooses to receive the benefits of a retirement account or an IRA after he or she dies. Beneficiaries of a retirement account or traditional IRA must include in their gross income any taxable distributions they receive.
If the inherited traditional IRA is from anyone other than a deceased spouse, the beneficiary cannot treat it as his or her own. This means that the beneficiary cannot make any contributions to the IRA or roll over any amounts into or out of the inherited IRA. However, the beneficiary can make a trustee-to-trustee transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of the beneficiary.
Like the original owner, the beneficiary generally will not owe tax on the assets in the IRA until he or she receives distributions from it.
The IRA actually remains in the parent's name, along with yours, and any distributions will be reported on a 1099-R with a code 4 (death) in box 7. You can not make any contributions to the inherited IRA.
Please note that since the IRA was inherited, you must start taking distributions by the end of the year following the year of death. The exception to this is if the entire account balance is distributed by the end of the calendar year five years after the year of death.
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Retirement Topics - Beneficiary | Internal Revenue Service
Chart of Required Minimum Distributions for IRA Beneficiaries
