Income spreading

[shoover]

I have a client who's husband passed away in 2021 from Covid. After three years his estate settled in 2024 and my client got a large distribution from her deceased husband's retirement account. That distribution was reported on a 1099'r. Is there a way to spread the income over multiple tax years to reduce tax liability for this year?

[BobKamman]

Not if it wasn't rolled over to an inherited IRA.  Why the delay? Beneficiary was still the first wife?  

[ljr]

if she was the beneficiary, it should have been immediate and why the h--- didn't she call you before she took it and get advice about rolling it over instead of taking it.. . . . oh we all know the answer to that.

[shoover]

Husband retired in 2015 and never fill out paperwork making his wife or anyone beneficiary. There was a dispute between wife and his children from a previous marriage. It was settled in 2024 with wife getting a percentage and each of the children getting a percentage. The money was distributed and reported on a 1099r.

[qbteachmt]

"The money was distributed and reported on a 1099r."

Form 1099-R is from the issuer for money Out. They don't know what happened to the funds, if something was done that involved the money In, somewhere else.

However, it appears your taxpayer accepted the funds. Unless she can prove he had Basis in that account, this is reported as ordinary taxable income. When the funds were distributed, was there withholding? Do you see gross vs net?

[dd4vols · Accepted solution]

Was her 1099-R just for her percentage, and hopefully not for the whole account distribution??

[BobKamman]

And of course the legal fees to collect it are not deductible, because corporations needed a tax cut in 2017.  

[shoover]

There was withholding, but not nearly enough, which is why I am exploring options.