1099-R inheritance tax treatment depends on whether it was inherited from a spouse or not.
When you receive a distribution from an inherited IRA, you will receive a 1099-R, with a Distribution Code of '4' in Box 7. This gross distribution is usually fully taxable to the beneficiary/taxpayer unless the deceased owner had made non-deductible contributions to the IRA
You may have to pay income tax on the distribution, based on the type of plan and the manner in which contributions were made by the decedent. While the form 1099-R has a lot of information, you may need more data to determine taxable portion of the distribution. For example, if the 1099-R is for an IRA, you need to know the basis - the amount of after-tax contributions to the account. If no after-taxes contributions were made (or you don't know it and can't find the information) the entire amount is taxable.
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