Estate Tax Basics
- All of the assets a person has when he dies become his estate. An executor appointed in the decedent's will manages the estate and ensures that beneficiaries receive assets from the estate according to the wishes of the decedent. Estate taxes are paid by the estate itself, rather than the recipient of any assets that come out of the estate. In other words, if you receive valuable coins as inheritance from someone's estate, the coins have already been subjected to federal taxation and you owe no additional federal taxes on the coins at the time that you receive them.
- The IRS says that estates are granted a $5 million unified credit as of 2011, which reduces the amount of assets that are subject to estate taxes. This means that estates with less than $5 million in total assets are not subject to federal estate taxes.
Selling Inherited Property
- Even though you are not responsible for paying federal estate taxes on coins and other property you receive from an estate, you may owe federal taxes if you sell coins or other items of value in future. The IRS imposes capital gains tax on profits realized from selling items that have increased in value over time. When you receive coins or other property from an estate, the "basis" or initial value of the property is its fair market value at the time you receive it. When you sell an asset, you owe capital gains tax on the amount you receive from its sale minus the basis value. For example, if you inherit coins that are worth $10,000 at the time you receive them and sell them 5 years later for $12,000, you owe capital gains tax on the $2,000 gain.
- The federal government does not impose any tax on the recipients of inheritance, but state governments have their own estate and inheritance tax laws. Some states impose inheritance taxes that force the recipients of inherited property to pay taxes. Inheritance tax laws vary from one state to another (see Resources).