Thank you very much for the information. It was helpful to know that if the estate pays the taxes then I should not report it on my tax return.
I checked and found the estate did receive a 1099R from the IRA account servicer but they only sent one for one half of the IRA amount with distribution code #4. My sister and I did not receive any 1099R.
I am in contact now with the servicer to find out if they will correct to the full amount or issue another 1099R to the estate for the other half of the funds. I think they may have an error in how they processed the two payouts: one was listed as "Distribution" and the other was listed as "Transfer Withdrawal" but both were cashier checks made out to each of our names and we each deposited into a regular savings accounts.
