How are mutual fund beneficiaries taxed?

I am the beneficiary of my father's mutual fund or IRA. When the money is distributed to me, does the IRS see that as income or as inheritance? How it is taxed?

since it was never taxed, it will be upon distribution, but you won't have to pay any of the penalties.

The IRA was tax deferred, which means when you take the money, you will be taxed. This is taxed as regular income. (Because your dad never paid the taxes on it, you get to.)

IF the mutual fund is a separte non-IRA account, you will get taxed only on the difference between the value on the date of death and the value when you sell it. This will always be a long term gain or loss.

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