Vivian (28) is the beneficiary of her deceased grandmother's traditional IRA. She received a Form 1099-R reporting the $10,000 gross distribution. The form had a distribution code "4" in box 7, indicating that the distribution is due to death. What is the tax consequence of this distribution?

Question

02-01-2022
Law

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Vivian (28) is the beneficiary of her deceased grandmother's traditional IRA. She received a Form 1099-R reporting the $10,000 gross distribution. The form had a distribution code "4" in box 7, indicating that the distribution is due to death. What is the tax consequence of this distribution?

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Tundexi Tundexi · Answer 1 · 2022-01-10T11:01:13+01:00

The tax consequence of the distribution is that the Gross distribution will be taxable income but Vivian may claim an exemption from the 10% additional tax on early distributions.

The tax consequence entails the amount of taxable income which must be contributed to the tax authorities.

Here, because she received a Form 1099-R reporting the $10,000 gross distribution, then, she is liable to pay tax.

In conclusion, the tax consequence of the distribution is that the Gross distribution will be taxable income but Vivian may claim an exemption from the 10% additional tax on early distributions.