Inherited money or property: what’s taxable and the tax on a sale, figured before you sell
Free tax review
Find out what we’d handle and what it costs
Thirty minutes by phone; you leave with one written price.
We sort what you inherited into what is and isn’t income, document each asset’s date-of-death value from the executor’s figures or an appraisal, and prepare the return. The first review is free, any planning is one flat fee quoted in writing before work starts, and individual returns start at $350. Based in Santa Clarita, we work with people who inherited money or property in any state.
Typical situations
Do you work with people who inherited money or property?
Yes, we take on the tax side of an inheritance: a parent’s house to sell, an inherited brokerage account, life insurance and an annuity, a Schedule K-1 — an estate’s or trust’s report of your share of its income — from a family trust or an estate, money from a parent abroad, and savings bonds.
An adult child selling a parent’s house
The seller has the executor’s date-of-death value — the fair market value on the date the person died — or an appraisal as of that date, the listing or closing statement, and the Form 1099-S, the closing agent’s report of a real estate sale. If the gain is figured from what the parent paid, the return reports the wrong gain. The main-home exclusion applies only if the heir owned the house and lived in it as their own main home at least 24 months of the 5 years before the sale, counting only their own time. We figure the gain from the documented date-of-death value. Whether a loss can be deducted depends on how the house was held and used, so we check that too. More on the tax side of selling a home. Individual returns from $350.
Someone who inherited a brokerage account and sold shares
The seller has the account statement as of the date of death, the Form 1099-B, the broker’s report of the sale, and a Schedule A (Form 8971) — the executor’s statement of an asset’s estate tax value — if one was sent. If the 1099-B shows a basis (the starting value a gain or loss is measured from) that isn’t the date-of-death value, or shows none, and the return copies it, the wrong gain gets reported. The sale goes on Form 8949, where each sale is listed, in the long-term part with “INHERITED” where the purchase date would go, and a basis the broker reported wrong is corrected with an adjustment and an explanation. We take the date-of-death value from the executor or the statements and put it on the return.
A beneficiary paid a parent’s life insurance and an annuity
The beneficiary has the insurer’s claim letters and the Form 1099-R, the insurer’s report of the annuity payout. If interest was added to the insurance, there’s also a Form 1099-INT, the interest report. If the annuity is treated like the insurance, taxable income is left off the return. Life insurance paid because of a death generally isn’t income, while an annuity’s payout above what the parent paid in is taxable to the beneficiary when it’s paid. We read the insurer’s paperwork and the 1099-R for the parent’s cost before reporting either.
A beneficiary of a family trust or estate with a K-1
The beneficiary has the Schedule K-1 (Form 1041) — the estate’s or trust’s report of the beneficiary’s share of its income — and the trustee’s or executor’s distribution letter. If the K-1 is left off or reported differently from how the estate or trust reported it, the return is wrong. The beneficiary, not the estate or trust, pays the income tax on the share of its income the K-1 reports. We put the K-1 on the return as the estate or trust reported it and ask the trustee or executor for a corrected one if it looks wrong. The estate’s own return and the final return (the person’s last income tax return) are the executor’s — the executor’s side of the filings.
Someone receiving an inheritance from a parent who lived abroad
The recipient has the bank transfer records and the foreign estate’s papers. The inheritance isn’t income, but more than $100,000 in a year from a person who wasn’t a U.S. citizen or resident, or a foreign estate — related people counted together — is reported on Form 3520, the IRS form for large gifts and inheritances from abroad. If Form 3520 is missed, a penalty grows each month it goes unreported, unless there is reasonable cause. We check whether the person or estate was foreign and whether the year’s total tops that amount. If it does, we prepare Form 3520, priced into the quote.
A grandchild cashing a grandparent’s savings bonds
The grandchild has the Form 1099-INT from the bank at cash-in and the grandparent’s final return. If the 1099-INT is reported as is, interest already reported on the final return can be taxed twice. Interest earned after the date of death is the grandchild’s to report, and the interest earned before it depends on what the final return already reported. We check the final return before reporting the interest.
What’s taxable
Is an inheritance taxable income?
The cash, house or brokerage account you inherit generally isn’t income on your federal return, but what it earns after the date of death is.
An annuity’s payout above the parent’s cost, money the person was owed, and an inherited IRA can be income. Interest, dividends or rent it earns after the date of death are taxable to whoever receives them, and the year’s Forms 1099 are split at the date of death. Federal estate tax is the estate’s, not yours — the executor files Form 706, the estate tax return, and pays any tax from the estate — and most relatively simple estates file none. An inherited IRA or 401(k) works differently — how an inherited IRA is taxed.
We read the papers for each thing you received and tell you which pieces are income and which aren’t, before anything is filed.
Basis
What is my basis in inherited property?
Your starting basis in what you inherited is generally its fair market value on the date the person died, not what they paid for it.
The alternate valuation date, a later valuation date the executor can choose instead of the date of death, applies only if the executor files an estate tax return and elects it. If the estate had to file Form 706, the executor sends each beneficiary a Schedule A (Form 8971) with the value, and you can’t use a higher basis than that. A sale of inherited property is treated as long-term however soon after the death it happens. We take the value from the Schedule A, the executor’s date-of-death statements or an appraisal as of the date of death, and keep the document with the return — we don’t appraise.
What you get
What do I get from an inheritance tax review?
You get a written list of everything you inherited sorted into income and not income, a documented basis for each asset, and the figures for a sale you’re considering, all before anything is filed; the return that reports the sale, the K-1 and the income comes after the year ends.
The sorted list
Everything you inherited, sorted into what isn’t income and what is, and on which form each piece goes — the 8949 for a sale, the K-1 amounts, the interest. Form 3520 is checked for money from abroad.
The basis, documented
Each asset’s basis, with the document it comes from: the Schedule A, the executor’s statements or the appraisal.
The sale, figured first
The tax on a planned sale of the house or the shares, figured before you sell — the actual numbers, in order, with the reasoning written next to them.
The return
The return that reports the sale, the K-1, the annuity and the interest — or the figures handed to your own preparer.
And an honest read on whether planning is worth paying for. If it isn’t, we tell you and you’re done.
What we check
What do you check when someone inherits money or property?
Before an inheritance is reported, we read the executor’s date-of-death values, the account and closing statements, the K-1s and 1099s, and last year’s return.
- The executor’s date-of-death values or a Schedule A (Form 8971), or, without either, an appraisal as of the date of death
- The brokerage statement as of the date of death, checked against the Form 1099-B
- The closing statement, checked against the Form 1099-S
- The Schedule K-1 (Form 1041), checked against how the estate or trust reported it
- The insurer’s claim letter, checked against the Form 1099-R for the parent’s cost
- The Form 1099-INT for savings bonds, checked against the final return
- The deed and the trust papers, read for the tax point only
- The transfer records for money from abroad, and last year’s return
California
What’s different in California when you inherit?
In California, four things are different: the state taxes no inheritance itself, community property can reset the basis on both halves, a house sale brings Form 593 withholding, and property tax follows its own rules.
- No California inheritance tax. California has no inheritance tax and, for deaths after 2004, no estate tax, but California income tax still applies to what the inheritance earns and to a gain when it’s sold, taxed as regular income. We put the income and any sale on the California return.
- Community property. When a married person dies in California or another community property state, the whole community property’s basis — the survivor’s half included — generally becomes its value at the date of death, as long as at least half of it counted in the estate; property held as joint tenants generally gets a new basis only on the late spouse’s half. We check from the deed and the estate papers how the property was held.
- Selling an inherited California house. When an inherited California house sells, escrow — the company that closes the sale — usually withholds California tax from the proceeds. That stops only when the seller certifies an exemption on Form 593 before escrow closes — for example a loss or zero gain when the amount realized after selling costs is at or below the basis — and only an estate or trust selling the house can use the main-home box for the person who died. We work out from the numbers which exemption the facts support and the seller signs it; anything withheld comes back only as a credit on the California return, which we claim.
- Property tax. Property tax is separate from income tax: under Proposition 19, the parent-child exclusion applies only if the home was the parent’s main home and becomes the child’s own main home, and a rental home doesn’t qualify. The claim is filed with the county assessor where the house is; we don’t file it.
Pricing
What does inheritance tax planning cost in 2026?
In 2026 the $0 first review comes before any paid work: individual returns start at $350, self-employed returns start at $650 for a year with one business or one rental — such as an inherited house rented out before it sells — and business returns start at $850 with the owner’s personal return included. Any planning after the free review, and each return, is a flat fee quoted in writing before we start.
What moves a quote: a sale of inherited property (a house or shares), a basis to document for each asset and whether the executor has date-of-death values or a Schedule A, a K-1 from an estate or trust, an inheritance from abroad and Form 3520, a business or a rental on the same return, and a prior year to fix.
Planning review
$0 first review
Planning after it, only if it’s worth paying for.
Individual return
from $350
Federal and state e-filed together, one price. A sale, a K-1 or Form 3520 is priced into the quote, never a separate price. Here is how we prepare the return.
With a rental or a business
from $650
One business or one rental on the same return, such as an inherited house rented out before it sells.
The quote is the price.
How it works
What happens after the free call?
After the free 30-minute call you have the engagement letter, sent during the call; signing it sets up a short onboarding call, which brings the portal invite and a checklist.
The free call
Thirty minutes, six to eight questions: what you inherited, the date of death, whether the estate or trust is still open, whether anything has been sold, any K-1 or 1099 you received, and anything from outside the US. It ends with one flat price for the work we’d take on, in writing.
The engagement letter
It goes out during the call, with the price in it. Sign it when you’re ready; it doesn’t expire.
Documents
You send the date-of-death values from the executor, the closing or brokerage statements, and any K-1 or 1099 you received, through the secure portal.
The planning review
We send the written list and the sale figures, then walk through them with you by phone. You decide whether and when to sell.
The return
Half the return fee starts the work, and the balance is due before e-file. You see the return before it’s filed.
Communication
You’ll know where the review and the return stand.
The person who answers the phone is on the same team that figures the numbers and prepares the return.
The same-day rule
Call or email during business hours and you’ll hear back the same day — all twelve months.
Open estate or already sold
Whether the estate is still open or the house has already closed, the free call ends with a straight answer on whether we’re the right fit.
Admitted to practice before the IRS
Our team of IRS representation specialists is admitted to practice before the IRS. If an IRS letter shows up about the inheritance or the sale, forward it: how we handle IRS letters.
The N&T Tax & Advisory Group team
For a person who inherited money or property, we figure what’s taxable, document each asset’s basis and prepare the return.
Tax planning · Tax preparation · IRS representation · Direct line: (661) 554-4495
Reviews
Rated 5.0 on Google
★★★★★ Twelve reviews, every one five stars, every one verifiable. Read all of them on Google →
"Alex helped me resolve a complicated tax situation that had been causing me a lot of stress. He was extremely knowledgeable, responsive, and efficient throughout the entire process."
Kevin B. — via Google
"Working with Alex was straightforward. I hadn't looked at my books all year, but he made my life easy and handled the whole profit and loss at the end of the year so I could get my taxes done."
Levon B. — via Google
"I came to this company with previous tax years and bookkeeping that were done incorrectly. They're very knowledgeable about what they do and help me get everything in order at a very reasonable price."
Sayra A. — via Google
Where we work
Do you work with people who inherited outside California?
Yes — remotely, in any state. The executor’s date-of-death values, the closing statement and any K-1 come through the secure portal, and we walk through the numbers by phone and screen share. If you live in another state, we prepare that state’s return too and price it into your quote.
What we don’t do
We do the tax side: the planning review, the return, and IRS letters. We don’t do estate planning, wills, trusts or probate; we don’t value or appraise property, file property tax claims, give investment, financial or legal advice, or represent anyone before the FTB, California’s Franchise Tax Board — when a question needs an attorney, we tell you. The executor’s own filings (the final return and Form 1041, the estate’s own return) aren’t part of this review; we quote them separately.
Worth reading
What can you read before you call?
If the inheritance also left you the final return to file or an IRA, these posts cover those sides.
Filing Taxes for a Deceased Person: Who Files the Final Return and When It Is Due
If you also inherited an IRAWho Should I Talk To After Inheriting an IRA — and What Should I Ask Them?
If your spouse left you an IRAI Inherited an IRA From My Spouse and I’m Not 59½ Yet — Should I Roll It Into My Own?
FAQ
Inheritance tax questions
Do I have to pay taxes on an inheritance?
Generally not on what you inherit itself, because it isn’t income on your federal return. What gets taxed is what it earns after the date of death, a gain when you sell it, and a few specific items: an annuity’s earnings, savings bond interest, money the person was owed, a K-1 share of an estate’s or trust’s income, and withdrawals from an inherited IRA or pension, which may be partly income. We sort everything you received into what’s taxable and what isn’t.
Do I have to report an inheritance on my tax return?
The inheritance itself usually isn’t reported as income. What goes on the return is the income it earns, any sale, and any Schedule K-1 from an estate or trust: a Form 1099-S means the sale is reported even with no gain, and a sale on a 1099-B goes on Form 8949 marked INHERITED. Money from a person who wasn’t a U.S. citizen or resident, or from a foreign estate, is reported on Form 3520, filed separately from the return, when it tops $100,000 in a year. We put each piece on the right form.
Who pays the estate tax, the estate or the heirs?
The estate. The executor handles the estate tax return and pays any tax out of the estate’s funds, so heirs don’t pay it on their own returns. One is needed only when the estate and lifetime taxable gifts top $15,000,000 for deaths in 2026. If you’re also the executor, the estate’s own filings are quoted separately.
Should I sell an inherited house right away?
When to sell is your decision. For tax, the gain is the sale price less selling costs, measured against the house’s value on the date of death. We figure the tax at the price you expect before you list it.
Is life insurance taxable to the beneficiary?
A payout received because the insured person died generally isn’t income and isn’t reported. Interest paid on it is taxable, for example when the insurer pays in installments or adds interest to a delayed payment. A policy that was sold to you for a price works differently. We read the insurer’s letter and any 1099-INT before reporting anything.
Is it too late to plan if I already sold?
No. The work moves to the return: the date-of-death basis documented, and a wrong basis on the 1099-B corrected. A past year filed with the wrong basis can be looked at for an amended return, priced in the quote. Earlier leaves more room, because the figures are set before the sale instead of reconstructed after it.
Want to know what your inheritance means for your taxes?
One free 30-minute call. You’ll leave knowing what we’d handle and what it costs — whether or not you hire us.
Rather talk now? Call (661) 554-4495 — reach us during business hours and you’ll hear back the same day.
Our team of IRS representation specialists is admitted to practice before the IRS. This page is general information, not tax advice for your specific situation.