Will i be taxed on a life insurance policy that i inherit and if so what is the tax basis?

If you are receiving the death benefit then it is almost always income tax free. There may be some estate tax considerations if the deceased estate is large enough. But unless you are talking millions, you should get the death benefit tax free.

I believe this is tax-free. You should consult with a CPA. Do you have an accountant?

Generally tax-free, if it's a business partner though, taxes can apply. But family and friends, no tax unless greater that 2 million.

Usually there are no taxes owed on life insurance proceeds.When a person insured by a life insurance policy dies during the term of the policy the proceeds are paid to the beneficiary or beneficiaries. Life insurance death benefit proceeds are usually not subject to state and federal income taxation. But, if there is no beneficiary, the death benefit proceeds of the life insurance policy may be included in the estate of the deceased. Then, it may be subject to state, federal and inheritance taxes. Also, the proceeds may be subject to federal estate taxation. If you own all or part of the life insurance policy at the time of your death, the proceeds may be included in your gross estate for federal estate tax purposes. Also, federal gift taxes and state inheritance taxes may apply to life insurance policy proceeds under certain circumstances. You may want to consult a tax advisor regarding your questions about any estate, income and gift taxes related to any life insurance policies you own or are considering buying. Also, your insurance agent should be able to tell you if your life insurance policy benefits will be taxable. Finally, different taxes may apply to the benefits paid by your life insurance policy if the death benefit is paid to the beneficiary in installments, instead of as a lump sum. The interest portion, if any, of each installment is usually treated as taxable to the beneficiary at ordinary income tax rates, while the remaining principal portion is tax-free. I hope that helps! Best of luck to you.

If you received this because they died, then the face amount is not taxable to you. If there are any delays in getting the money and you are paid interest, the interest would be taxable and you would receive a 1099-INT.The estate must include the value of the life insurance in it's total of estate assets, but any taxes owed (the estate had to be worth more than $2Million in 2007) would be the responsibility of the estate, not you.