[allisonsw]

My late mother-in-law left about $ 145,000.00 in cash and securites to be divided between her three children. We live in Pa.
I know there is a 4.5% Pa inheritance tax in Pa. on the total, but will the money my wife receives be subject to Pa and Fed income taxes.
We are both retired and over 65, income from soc.sec and some IRA , but that is it.

[ebaines]

There is no federal inheritance tax, and inheritance is not considered income, so you don't need to include any of this in your income tax filings.

As for the PA inheritance tax - before the heirs file their own inheritance tax forms they should make sure that the executor of the estate hasn't already paid the tax out of the estate's assets. You don't want to pay it twice!

[MukatA]

Any thing (money and property) you receive as inheritance, you (the receiver) don't pay any federal tax.
Exception: If you inherit a traditional IRA, you are called a beneficiary. Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive.