Had the estate paid the taxes at the estate's income tax rate, this (somewhat large) amount of Income in Respect of a Decedent would have been taxed at the estate's maximum tax rate of 39.6% (and you would have only received what was left over after these taxes). As TaxGuyBill said, by the estate passing this income through to you as beneficiary, you instead pay federal taxes at your marginal tax rate for ordinary income. Although this could be as high as 39.6% if you are already in the 39.6% tax bracket due to relatively high ordinary income from other sources, most people fall in a lower tax bracket.
