Inherited Investment Income

by Debbie
(New York City)

My husband recieved an inheritance when his mother passed away last spring. Most of the money was in the form of mutual accounts, which were transferred to his name and then liquidated.

We did not reinvest the money at the time, but put it into a savings account, thinking to use some to pay my son's college tuitiion over the next 3 years. Now he just recieved a 1099-B from one of the accounts indicating the gross proceeds.

None of the other accounts have done this, and have sent 1009s for interest only, which I can understand. My question is whether we have to pay income tax on this amount, is there some way to document that this was an inheritance, and should we have done something differently last year? And of course, is there anything we can do now to not have to pay taxes on this money?

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