Potential Tax Liability

+1 Al.  Coordinate with the executor of the will regarding valuation. Also note that if the inheritor was a named beneficiary for those items in the will, then it may be that the inheritance passed tax-free and may be disposed of without liability.  This can depend on the overall value of the estate.  Some states may have additional wrinkles based on value, too.

I believe, you have to inherit over 5 million before you owe any inheritance tax to the Feds. And, there are only a handful of states that collect inheritance tax at all. You'll have to look up the exact information because it changes.

What may be important to determine, is the value of the audio gear at the time you inherited it. This would be the basis value to figure out if you owe taxes or not, but only when you sell it, so did you have a profit or loss from the sale? I realize this is your friend's equipment. So, if your friend's equipment was valued at $65K when he inherited it. If he sold it later for $60K, he would have no tax owed.

However, he should ask his accountant about this stuff, because I'm not an accountant.
Kenny

I believe, you have to inherit over 5 million before you owe any inheritance tax to the Feds..... You’ll have to look up the exact information because it changes.

No, that isn’t correct, Kenny. The $5 million threshold (actually $5.45 million at present) is a threshold that determines whether or not an individual’s estate (not the heirs) has to pay an "estate and gift tax." Also, in addition to the value of the estate gifts made during the decedent’s lifetime that are in excess of the annual gift tax exemption count toward that threshold.

As far as taxation at the Federal level is concerned the inheritances pass tax-free to the heirs regardless of their value. But if inherited property is subsequently sold by an heir my previous comments apply.

Best regards,
-- Al

Hopefully you don't live in California like I do. We have one simple form for the transaction you're involved in. 

1. Enter how much you profit you made here:  $ ________. 

2. Write a check for the amount on line one and send it in. 

Hi- I am a retired tax attorney in California. I am not currently authorized to practice law in California ,due to non-payment of state bar fees, and for no other reason. Therefore, you should NOT rely upon this advice. I have represented both taxpayers and the I.R.S.for many years, and have also worked as an attorney-advisor to judges of the U.S. Tax Court in Washington, D.C.
 I can make the following general observations. Any federal estate tax would be owed and paid for by the estate itself, not by your friend, There is a minimum estate value that the  estate has to exceed before any estate tax kicks in. I do not know what that amount currently is because I have not checked it in many years, and it does change frequently. $5.4 million sounds about right, however.
  As for  any possible federal income tax liability, your friend most probably does not have any from the audio equipment sales. Your friend's basis in the audio equipment would be the fair market value of the property as of the decedent's death (or the alternate valuation date as determined by the executor). Since, as we Audiogoners know, the value of audio equipment almost always goes DOWN over time, it is extremely unlikely that there would be any capital gains, and hence no federal income taxes due from those sales.
   Hope this helps.  ---Steve