What is the tax liability from an inheritance from a trust and reported on a K-1 form?
You don't need to submit a K-1 form to anyone, but you will need to transcribe various entries on the K-1 form that you will receive onto the appropriate lines on your tax return.  Broadly speaking, assets received as a bequest from someone are not taxable income to you but any money that was received by your grandmother's estate between the time of death and the time of distribution of the assets (e.g. interest, mutual fund distributions paid in cash, etc) might be passed on to you in full instead of the estate paying income tax on this income and sending you only the remainder. If so, this other money would be taxable income to you.  The good news is that if the estate trust distributions include stock, your basis for the stock is the value as of the date of death (nitpickers: I am aware that the estate is allowed to pick a different date for the valuation but I am trying to keep it simple here).  That is, if the stock has appreciated, your grandmother never paid capital gains on those unrealized capital gains, and you don't have to pay tax on those capital gains either; your basis is the appreciated value and if and when you sell the stock, you pay tax only on the gain, if any, between the day that Grandma passed away and the day you sell the stock.
In the US the best way to solve the problem, IMHO, would be via a trust. Talk to a properly licensed trust/estate attorney and a tax adviser (EA/CPA licensed in your State). Using intermediary who's not a 501(c) organization may pose income tax issues to that intermediary as providing support to the needy is not a valid business expense. It may also pose gift tax issues, since the aggregate amounts may exceed the statutory exemption limits. Using a (non-revokable) trust you can avoid these issues, but others may come up (such as what to do with the trust income or undistributed moneys). Talk to the advisers about how to avoid them. I gift my daughter stock worth $1000. No tax issue. She sells it for $2000, and has a taxable gain of $1000 that shows up on her return.  Yes, you need to find out the date of the gift, as that is the date you value the fund for cost basis. The $3500 isn't a concern, as the gift seems to have been given well before that. It's a long term capital gain when you sell it.  And, in a delightfully annoying aspect of our code, the dividends get added to basis each year, as you were paying tax on the dividend whether or not you actually received it. Depending on the level of dividends, your basis may very well be as high as the $6500 current value.  (pls ask if anything here needs clarification) Here's an excerpt from the Charles Schwab website which I think will help evaluate your position: The simple answer to your question is no, the value of a gift of stock   for gift tax liability is NOT the donor's cost basis, but rather the   fair market value of the stock at the time the gift is given. So let's   say you purchased 100 shares of XYZ stock at $50 a share. Your cost   basis is $5,000. Now the stock is $80 a share and you give it as a   gift. The value of your gift for gift tax purposes is $8,000. In 2015, you can give up to $14,000 to an unlimited number of   individuals each year without paying a gift tax or even reporting the   gifts. If you give over that amount to any individual, however, you   must report the gift on your tax return, but you don't have to pay   taxes until you give away more than the current lifetime limit of   $5,430,000—for the amount above and beyond $14,000 per person per   year. So in the example above, there would be no gift tax liability.   However, if the stock happened to be $150 a share, the value of the   gift would be $15,000. You'd then have to report it and $1,000 would   be applied toward your $5,430,000 lifetime exclusion. You will need to pay a gift tax on the current value of the stock. I'm not familiar with the tax laws in India, but if your brother was in the US, he wouldn't pay taxes on that gift until he sells the stock. The recipient doesn’t have to worry about gift taxes. It's when the   recipient decides to sell the stock that the issue of valuation comes   up—for income taxes. And this is where things can get a bit more   complicated. In general, when valuing a gift of stock for capital gains tax   liability, it's the donor's cost basis and holding period that rules.   As an example, let's say you receive a gift of stock from your   grandfather. He bought it for $10 a share and it's worth $15 a share   on the day you receive it. If you then sell the stock, whether for a   gain or a loss, your cost basis will be the same as your   grandfather’s: $10 per share. Sell it at $25 and you'll pay tax (at   the short- or long-term rate, depending on how long he owned the   stock) on a gain of $15 a share; sell it at $8 and your capital loss   will be $2 a share. Ultimately, with a gift this large that also crosses international borders, you really should hire a professional who is experienced with these types of transactions. Their fees/commission will be completely offset by the savings in risk and paperwork.  http://www.schwab.com/public/schwab/nn/articles/How-Do-You-Value-a-Gift-of-Stock-It-Depends-on-Whether-You-re-the-Giver-or-the-Receiver I am not a tax professional, only an investment professional, so please take the following with a grain of salt and simply as informational guidance, not a personal recommendation or solicitation to buy/sell any security or as personal tax or investment advice. As Ross mentioned, you need to consult a tax advisor for a final answer concerning your friend's personal circumstances. In my experience advising hundreds of clients (and working directly with their tax advisors) the cost basis is used to calculate tax gain or loss on ordinary investments in the US. It appears to me that the Edward Jones description is correct. This has also been the case for me personally in the US with a variety of securities--stocks, options, futures, bonds, mutual funds, and exchange traded funds.  From the IRS: https://www.irs.gov/uac/about-form-1099b Form 1099-B, Proceeds From Broker and Barter Exchange Transactions A broker or barter exchange must file this form for each person: Edward Jones should be able to produce a 1099b documenting the gains/losses of any investments. If the 1099b document is confusing, they might have a gain/loss report that more clearly delineates proceeds, capital returns, dividends, and other items related to the purchase and sale of securities. I'm answering your second and third point. For first point it depends on case by case basis from which organization you are opening your trust. Trust Account are of different type: To earn interest you account should be of below type. Interest in possession trusts and Income Tax Trustees are responsible for declaring and paying Income Tax on income received by the trust. They do this on a Trust and Estate Tax Return each year. There are different rates depending on the type of income - as shown below. Type of income     Income Tax rate 2014 to 2015 tax year Rent, trading and savings     20% (basic rate) UK dividends (such as income from stocks and shares)  10% (dividend ordinary rate) He has included this on Schedule D line 1a, but I don't see any   details on the actual transaction. It is reported on form 8949. However, if it is fully reported in 1099-B (with cost basis), then you don't have to actually detail every position. Turbotax asked me to fill in individual stock sales with proceeds and cost basis information. ... Again, it seems to be documented on Schedule D in boxes 1a and 8a. See above. I received a 1099-Q for a 529 distribution for a family member. It was   used for qualified expenses, so should not be taxable. Then there's nothing to report. I believe I paid the correct amounts based on my (possibly flawed) understanding of estimated taxes. His initial draft had me paying a penalty. I explained my situation for the year, and his next draft had the   penalties removed, with no documentation or explanation. IRS assesses the penalty. If you volunteer to pay the penalty, you can calculate it yourself and pay with the taxes due. Otherwise - leave it to the IRS to calculate and assess the penalty they deem right and send you a bill. You can then argue with the IRS about that assessment. Many times they don't even bother, if the amounts are small, so I'd suggest going with what the CPA did. Maryland is one of only two states (as of the writing of that article) that collects both inheritance tax and estate tax. These are two different issues, and it's important to differentiate between them sufficiently. I can't provide you a definitive answer, so consult a tax professional in Maryland for specific details to make sure you don't run afoul of tax authorities. This blog has a nice summary of the differences, as of 2012: The estate tax is assessable if more than one million dollars passes at death.  The total dollar value of the property determines whether there is an estate tax.  The inheritance tax is not dependent upon the value of the estate, as even very small estates can have inheritance tax imposed.  Inheritance tax is assessed on property given to a person who is further removed in relationship than a sibling.  Thus, for example, a 10% tax will be assessed on property passing to a cousin, niece, nephew or friend.  Another section of the page states, as an example: If you give someone $10,000 in cash, the inheritance tax will simply reduce the amount inherited – in this case to $9,000. There are several other exemptions to the inheritance tax in addition to the immediate family exception discussed above: Property that passes from a decedent to or for the use of a grandparent, parent, spouse, child or other lineal descendant, spouse of a child or other lineal descendant, stepparent, stepchild, brother or sister of the decedent, or a corporation if all of its stockholders consist of the surviving spouse, parents, stepparents, stepchildren, brothers, sisters, and lineal descendants of the decedent and spouses of the lineal descendants. Putting this information together makes me think that the inheritance wouldn't be taxable in your case because it's a cash inheritance from an immediate family member, so it qualifies for one of the exemptions. Since I'm not a tax professional, however, I can't say that for sure. Hopefully these pages will give you enough of a foundation for when you talk to a professional. The LLC will file its own business taxes which may or may not have business level income and expenses.  At the end, the LLC will issue Schedule K-1 tax forms to the members, that based on their percentage ownership, will reflect the percentage share of the income/losses.    From an individual standpoint, the members need only worry about the K-1 form they receive.  This has quite a few pass-through categories from the LLC, but the Income/Loss may be the only used one.  The individual will likely include the K-1 by filing a Schedule-E along with their 1040 form.  The 1040 Schedule-E has some ability to deduct expenses as an individual. Generally it's best not to commingle expenses.  Additional schedule-E expense reporting is generally for non-reimbursed, but related business expenses.  If a member paid certain fees for the LLC, it is better for the LLC to reimburse him and then deduct the expense properly.  Schedule-E is on a non-LLC, personal level. You also may want to consider how this interacts with the stepped up basis of estates.  If you never sell the stock and it passes to your heirs with your estate, under current tax law the basis will increase from the purchase price to the market price at the time of transfer.   In a comment, you proposed:   Thinking more deeply though, I am a little skeptical that it's a free lunch: Say I buy stock A (a computer manufacturer) at $100 which I intend to hold long term. It ends up falling to $80 and the robo-advisor sells it for tax loss harvesting, buying stock B (a similar computer manufacturer) as a replacement. So I benefit from realizing those losses. HOWEVER, say both stocks then rise by 50% over 3 years. At this point, selling B gives me more capital gains tax than if I had held A through the losses, since A's rise from 80 back to 100 would have been free for me since I purchased at 100. And then later thought  Although thinking even more (sorry, thinking out loud here), I guess I still come out ahead on taxes since I was able to deduct the $20 loss on A against ordinary income, and while I pay extra capital gains on B, that's a lower tax rate. So the free lunch is $20*[number of shares]*([my tax bracket] - [capital gains rates]) That's true.  And in addition to that, if you never sell B, which continues to rise to $200 (was last at $120 after a 50% increase from $80), the basis steps up to $200 on transfer to your heirs.   Of course, your estate may have to pay a 40% tax on the $200 before transferring the shares to your heirs.  So this isn't exactly a free lunch either.  But you have to pay that 40% tax regardless of the form in which the money is held.  Cash, real estate, stocks, whatever.  Whether you have a large or small capital gain on the stock is irrelevant to the estate tax.   This type of planning may not matter to you personally, but it is another aspect of what wealth management can impact. "That wasn't an ""inheritance"" that arrived out of the blue and the ""bank"" contacted your girlfriend by email, was it? A UK tax code is basically an assessment of how much money you can earn in the UK before you have to pay tax on it - basically it's a coding for a tax allowance and as a UK tax payer HMRC (the UK version of the IRS) gives you one for free. If your girlfriend is not a UK tax payer she should get the necessary paperwork to show that she isn't, although I'm not sure if that's got any bearing on inheritance tax. There are no lawyers involved in that process normally, any appropriately accredited accountant can do that for you in the UK if you're not in the UK. When I had to apply for a change of tax status in the UK it certainly didn't cost me $9.6k to do so via my accountant there. In fact the whole thing cost a few pounds to pay for my accountant's time and that was it. In fact, that whole thing smells fishy to me as someone who used to live in the UK. Care to divulge the name and possibly address of the bank? Here's inheritance tax information straight from the horse's mouth. That should clear up any questions if your girlfriend is even liable for any inheritance tax in the UK in the first place. And then, given the sums involved, get the recommendation for a good lawyer and a good accountant in the UK (or an accountant who can recommend a lawyer) to make sure that that end of the transfer goes smoothly." In the US, an opposite-sex spouse who is a citizen as well, can receive an unlimited inheritance with no tax due from the estate. IRAs and retirement accounts which were pretax accounts, are inherited by a spouse who can then either treat the accounts as her own, i.e. even co-mingle with current IRAs, or treat as inherited IRA, and begin RMDs. In which case tax is due to the extent the money wasn't already taxed. I see the edits above. No tax should have been due. Mom can gift the kids up to $14,000 per year per kid with no paperwork at all. And another $14K to the kid's spouses or grandchildren. Above this number, a form 709 is used to tap into the lifetime exclusion.  As it stands now, it's unclear why any tax would have been due in the first place. Form 1099-misc reports PAYMENTS, not earnings.  This does not imply the EARNINGS are not taxable in the year they were earned. To answer the last question first: there are no tax consequences to you. If your family member is married (or has a joint owner of the funds), and so are you, each of them can give each of you the $14K annual gift, which would be $56K. The remainder of the $70K would be subject to either (1) Gift Tax for the tax year in which it was given, or (2) applied to the lifetime exclusion. Either way would require filing a form with the IRS. Form 8288 is to report to the IRS withholding of capital gains tax that may be due from the seller. Foreign nationals don't always file tax returns, so they often didn't pay capital gains tax on properties that they sold. Congress decided to make the buyers responsible for this tax so that they would have a better chance of collecting it. There is a penalty against the buyer if that tax is not withheld. Your attorney should have filed this form on your behalf as part of the closing papers. I think your first step is to look at your copy of the closing papers and see if money was withheld from the sale. There definitely should be disclosure of these requirements before the sale. You should also follow up with your attorney to see whether he has already filed the forms 8288 and 8288-A on your behalf. If you had purchased for less than $300,000 (and were purchasing for your primary residence), you would not have to file that form, but since the property was under $1,000,000 the withholding rate is only 10% (rather than 15%). For those who don't know, credit card checks are blank checks that your credit card company sends you.  When you fill them out and spend them, you are taking a cash advance on your credit card account.  You should be aware that taking a cash advance on your credit card normally has extra fees and finance charges above what you have with regular credit card transactions. That having been said, when you take one of these to your bank and try to deposit them, it is entirely up to bank policy how long they will make you wait to use these funds.  They want to be sure that it is a legitimate check and that it will be honored.  If your teller doesn't know the answer to that question, you'll need to find someone at the bank who does.  If you don't like the answer they give you, you'll need to find another bank. I would think that if the credit card is from Chase, and you are trying to deposit a credit card check into a Chase checking account, they should be able to do that instantly.  However, bank policy doesn't always make sense.