My Mom passed 6 years ago. Before her passing she cashed out her annuities and savings to avoid the hospital getting the money. The money went to a trust and then to me. At her death we sold her house and cleared probate and then I received the proceeds.
The IRS is now saying that when she cashed out the annuities she never paid taxes on the income. Nw the IRS is saying the estate owes money to the IRS. Do I personally owe the money? FYI it's been spent over the 6 years.
2007-07-09 13:37:04 · 4 answers · asked by rk_blakley 1 in Business & Finance ➔ Taxes ➔ United States
George is wrong; Nina is right. Section 6901 of the Internal Revenue Code allows the IRS to pursue transferees. As you received funds from your mother's estate for no consideration (you didn't pay anything for it), you are a transferee up to the amount you received. The other defense open to you is that the IRS computed the tax incorrectly in connection with your mother's receipt of the annuity. It is possible that she had a tax basis in the annuity that would lower the amount of tax due. Like the others, I suggest a competent accountant to compute the amount of income tax due on your mother's estate (not technically an estate tax problem, it's the income tax liability of an estate). Another defense to consider is the statute of limitations. The normal statute of limitations is 3 years from the date that your mother's income tax return was filed. Section 6901 adds a year. It is possible the unreported annuities exceeded 25% of your mother's gross income, which could add another 3 years. Make sure your tax advisor analyzes that issue as well.
2007-07-09 18:37:25 · answer #1 · answered by mattapan26 7 · 1⤊ 0⤋
If your mother took a distribution from taxable annuities and did not pay taxes, then her estate, or the beneficiaries of her estate, owe income taxes on that money.
You need a professional to sort this out. The IRS position is that you owe the taxes on the amount of the taxable distribution that you received, if the estate did not pay the taxes owed.
2007-07-09 13:52:48 · answer #2 · answered by ninasgramma 7 · 3⤊ 0⤋
you need to talk to a tax lawyer. how ever since it is your moms estate that owes the taxes and it has already cleared probate, i don't think the IRS can collect anything.
2007-07-09 13:43:49 · answer #3 · answered by george 2 6 · 0⤊ 1⤋
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2015-02-09 19:55:37 · answer #4 · answered by Kathye 1 · 0⤊ 0⤋