It's important to understand that cash you inherit is not taxable, but property or other assets may be taxable. For example, if the deceased had an IRA with no beneficiaries designated, it would pass to their estate. If the estate cashes out the IRA and distributes the proceeds, they are fully taxable to the heirs—because IRA funds are not taxed on contributions or gains, they are always fully taxed when they are withdrawn, even by heirs. This is one of the things that might be reported on a K-1.
Or, if the deceased has an ongoing business that is managed by an estate (such as a writer or musician who gets royalties) that income is taxable to the heirs just as it would have been taxable to the person. (The estate could pay the taxes, but the estate's tax rate is higher than your personal tax rate, so you save in the end by paying the tax yourself.)
We need to know more about your situation; why did the estate issue a K-1, and where did the money come from.
