Yes. While an inheritance is generally not taxable to the beneficiary recipient, that's not true for everything. For example, when you have monies distributed from the tax deferred retirement account of the person who passed, then if their estate doesn't take the distribution and pay taxes on it, the beneficiary recipient will. In that case, you get a 1099-R and have to report it. I would expect the code in box 7 to be a 4.