Do I have to pay taxes on money from my step mom?

July 10, 2002

From:  Lee Maclean
Date:  Fri, 19 Jun 2002

My father recently passed away and left the live and 401k money to his wife of 9 months. She is going to distribute the money to each of his sons, and I was wondering if we have to pay taxes on the money she gives us.

The amount for each will be around 35,000.00.

Thank you,
Lee

Portland, Oregon

Answer

Date:  28 Jun 2002

Hello Lee,

Oregon has an inheritance tax. I don't have the details about it, so I suggest you consult with a local CPA.

I hope your stepmother is getting legal and tax advice. She should be considering making a disclaimer for her inheritance to avoid being subject to income tax on the 401(k) funds and having the amounts given to you and your brother(s) subject to gift tax.

If she files the disclaimer on time, you and your brother(s) will be subject to income tax on the 401(k) funds that you receive.

Based on the information you gave me, I can't tell whether your father's estate is subject to estate tax. Your stepmother should also consult with an attorney and tax advisor to find out.

Good luck!
Mike Gray

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