Question:
Wife's mother just passed away. Some of her small estate is in IRA accounts. Are state or local taxes due on the inheritance (specifically because the money is in a tax deferred account)

Answer:
If it is from a traditional IRA-YES. If it is from a ROTH IRA-MAYBE. You really need to bring your documents to a CPA or Enrolled Agent for review. I have listed some articles below that can help. The first is on ROTH IRAs and the second on traditional IRAs.

Be sure to have tax withholding on any distribution to avoid owing IRS.

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