Did you inherit the IRA, and cash it out?
Or did the Estate cash out the IRA, and you received the money distribution from the Estate?
Was it a Roth IRA or a Traditional IRA?
Although the cash inheritance is not taxable, you are a beneficiary of the Estate. That means you pay tax on the income from the Estate, as reported on the K-1.
Because the Estate removed it from the IRA, that is taxable income, which flows to you through the K-1 (assuming it was a deductible Traditional IRA). If the money was just in the decedents bank account (not an IRA), it would not be taxable. But because it was in an IRA, it is taxable.
As fanfare noted below, the income from the K-1 is not a fixed 40%. It is taxed at your regular tax rate.
You will not get a 1099-R because you did not receive the money directly from the IRA. The income is covered by the K-1.
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.
If you inherit an IRA, it is taxable. The rate is your tax rate, not a fixed 40%.
:Look for a 1099-R in January.
Fanfare is right there is a thing called an inheritence tax. You will not pay it however until you go file your taxes.