Am I Being Double-Taxed?
By Judy Feldman

(MONEY Magazine) – Q. My father's estate includes an annuity he purchased for life insurance purposes. The estate triggered state and federal taxes. And I'll owe income taxes on withdrawals from the annuity. Is this double-dipping? -- Janey Camp, homemaker, Raleigh, N.C.

A. Yep. It's sad, but true, that annuities (and IRAs) must be included in an estate for estate-tax purposes. Congress did ease the burden to beneficiaries with what's called the "income in respect of a decedent" provision, which lets you deduct the amount of federal estate taxes you paid before calculating income taxes on subsequent withdrawals from the annuity or IRA. --JUDY FELDMAN

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