My wife died in 2018. She had an IRA that I would like to take as a direct distribution. Will it be reported as income or treated as an inheritance?

It cannot be inherited .

You can elect to treat it as your own IRA and then it will merge in with your other IRAs.

It certainly is an inherited IRA.    If you elect to keep it intact, you can either keep it as a separate inherited IRA that remains in your spouses name or elect to to treat it as your own IRA and have it moved to your own account in your name.

If you just elect to take a total distribution and close the IRA then that would not matter.

In any event, any distribution is taxable income (assuming that this is a Traditional IRA and not a Roth IRA) unless there was any non-deductible basis in the IRA tracked on a 8606 form.

i meant to say It cannot be treated as a tax-free inheritance, as proposed in the question.