Inherited IRA from parent. Know how to calculate from bases of estate. I need to know how to enter into TT. There is a tax benefit I can claim. Hope this made sense.

[smkfam]

Father in law died in 2001. Left an IRA for the family. Each year since, we have to calculate our distributions and a multiplier by the "bases of estate" and we get a number. This number we put into the tax form to claim as a tax break. I just can not remember where it goes or what special calculations TT needs to do to accommodate it. Yes, now it all seems clear as mud. LOL. 

[LudwigVan_fan]

This does not make sense to me.  First, and IRA can only be left to an individual or split between individuals.  Each person inheriting the IRA has to set up their inherited decedent IRA account.  Was your Father in law over 70 !/2 at the time of his death?  This has a bearing on the required minimum distribution (RMD).  The rules are somewhat complex, but each person inheriting the IRA might be required to receive a RMD each year, either based on their own age and distribution rules, or, in reference to the age of the person who died.  I don't know what you mean by "bases of estate"; but the RMD is a factor multiplied by the FMV of the IRA at December 31 of the prior year.  Thus for 2017, the RMD would be the FMV of the IRA at 12/31/2016 multiplied by the factor for the individual who inherited the IRA.

[smkfam]

Thank you for responding. I actually believe we might be talking about the same thing...:-) We have a spreadsheet set up that has the whole thing set up year by year. The Bases of Estate term is my wife's and I believe it is what you call the FMV (Fair Market Value?) of the IRA at the time of death. No, he was not over 70, he was 65. And yes, we each have our own account set up.

Next, the way we calculate it is we take the distribution total divided by the FMV at time of death. Then using that percentage, we then multiply it by the tax that was paid at time of death. That number then becomes the amount we can claim for the individual tax year.

My dilemma is that I don't remember where we plug it into on TurboTax...lol! So maybe this has made it a bit clearer? Thank you!!

[dmertz]

I think you are talking about two different things.  The original question seems to be the calculation of a deduction for Income in Respect of a Decedent because the deceased's estate was subject to estate taxes.  A deduction can be taken for IRD up to the beneficiary's portion of the estate tax paid.

To enter the deduction, go to Deductions & Credits -> Other Deductions and Credits -> Other Deductible Expenses.  Answer No to Generation Skipping Taxes and to Less Common Expenses.   Answer Yes to Any Other Deductions.  Enter the deduction for IRD in the box labeled Estate Tax Deduction.

[smkfam]

A little late, but Thank You for your help with this! I have copied and pasted it into the spreadsheet so I know each year where to place it! I swear by the time we retire, I’ll be an expert at this stuff!! 

An additional topic came up. TT asks me when dealing with the IRA: “…was the entire amount of the distribution equal to the RMD or what percentage was the RMD". Sometimes we do take extra cash out, but I was wondering, how do I determine what the original RMD was at the time of withdrawal? Thanks, I appreciate it!! 

Steve

[fanfare]

you need a tax professional to do your taxes for you.

Your methodology sounds wacky.

[dmertz]

You are talking about the estate tax deduction for receipt of Income in Respect of Decedent a miscellaneous deduction not subject to the 2% limitation.  In TurboTax go to Deductions & Credits -> Other Deductions & Credits -> Other Deductible Expenses, then answer Yes on the page that asks "Did you have any of these other expenses."  Enter the amount in the box labeled "Estate tax deduction not reported on an estate K-1."

This deduction on your personal tax return is to compensate for estate tax having been paid on the same money.

[smkfam]

Gee, thanks for the “encouragement” @fanfare….my methodology is sound, I know what I’m doing in most circumstances, I’m just not “financial terminology” educated….LOL. I know the concepts I’m going for, just not how to describe them. But thank you anyway. 

[smkfam]

@dmertz Thank you for the response and yes, the info you have given me is accurate. You were helpful last year with the same info, so much so, I copied and pasted it right into my spreadsheet! 🙂 However, what I encountered this year is the question from TurboTax which asks me: “Is the full amount withdrawn from the IRA the entire Required Minimum Distribution or is it a part of it” Then in the next screen it asks me which part or how much was the Required Minimum Distribution. My problem is I don’t know how to determine that since it’s not listed on the 1099. Thanks, I hope this makes more sense….as I said, financial terms challenged….LOL.

Steve

[dmertz]

(I failed to notice that this was a follow-on to an old question.)

TurboTax only asks this RMD question to determine how much might be eligible for rollover.  However, a distribution paid to a non-spouse beneficiary is not eligible for rollover no matter how much was RMD, so it doesn't matter how you answer this question.  For simplicity, just say it was all RMD and TurboTax will skip the question asking if you rolled any of it over.