The probate court is involved, but the process is simple and quick. Do I have to report inheritance to IRS? You won’t have to report your inheritance on your state or federal income tax return because an inheritance is not considered taxable income. Does Chapter 7 erase all debt? Chapter 7 bankruptcy is a legal debt relief tool. If you’ve fallen on hard times and are struggling to keep up with your debt, filing Chapter 7 can give you a fresh start. For most, this means the bankruptcy discharge wipes out all of their debt. Gift Tax:
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