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Will inheritance money I placed with an investment firm be taxed as income if I took out some of the funds in 2016?

I received inheritance money in 2013. Needed to withdraw some of the funds in 2016.

1 Best answer

Accepted Solutions
IsabellaG
Employee Tax Expert

Will inheritance money I placed with an investment firm be taxed as income if I took out some of the funds in 2016?

Inheritances themselves are not taxable to the heirs. However, if you've inherited shares in stocks or a mutual fund in 2013, and then sold those shares in 2016, you could have either a gain or a loss on the transaction.Or if you inherited cash, then invested it, you would be taxed on the gain on the sale when you sell the shares in the fund.

You would receive a 1099-B for the proceeds of the sale in 2016, and you would report it in TurboTax in Stocks, Mutual Funds, Bonds, Other (you need TurboTax Premier for this). 

Your cost basis in the shares is how much you paid for them in 2013.If you inherited shares of stock your basis is the fair market value of the shares as of the date of death of the decedent. You would also add to your basis any reinvested dividends that you paid tax on over the time you owned the shares.

If you respond back with specific information, I can show you how to enter this in TurboTax.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

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1 Reply
IsabellaG
Employee Tax Expert

Will inheritance money I placed with an investment firm be taxed as income if I took out some of the funds in 2016?

Inheritances themselves are not taxable to the heirs. However, if you've inherited shares in stocks or a mutual fund in 2013, and then sold those shares in 2016, you could have either a gain or a loss on the transaction.Or if you inherited cash, then invested it, you would be taxed on the gain on the sale when you sell the shares in the fund.

You would receive a 1099-B for the proceeds of the sale in 2016, and you would report it in TurboTax in Stocks, Mutual Funds, Bonds, Other (you need TurboTax Premier for this). 

Your cost basis in the shares is how much you paid for them in 2013.If you inherited shares of stock your basis is the fair market value of the shares as of the date of death of the decedent. You would also add to your basis any reinvested dividends that you paid tax on over the time you owned the shares.

If you respond back with specific information, I can show you how to enter this in TurboTax.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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