Can long-term capital loss from a deceased person carry over to her trust? (2024)

• TurboTax Business Windows

‎May 31, 20194:49 PM

Capital lossesbelong to the decedent. Capital losses incurred in the year of death, as well asany capital loss carryovers, can be used only on the decedent's final income tax return. Any capital loss carryoversthat are not used on the final return for the decedentare essentially lost.

Per Rev. Rul. 74-175:

A capital loss and a net operating loss from business operations sustained by a decedent during his last taxable year are deductible only on the final return filed in his behalf; such losses are not deductible by his estate.

Seehttp://www.legalbitstream.com/scripts/isyswebext.dll?op=get&uri=/isysquery/irl1a38/1/doc

See alsoSee also https://www.irs.gov/publications/p559/ar02.html#en_US_2015_publink100099527

Capital lossesbelong to the decedent. Capital losses incurred in the year of death, as well asany capital loss carryovers, can be used only on the decedent's final income tax return. Any capital loss carryoversthat are not used on the final return for the decedentare essentially lost.

Per Rev. Rul. 74-175:

A capital loss and a net operating loss from business operations sustained by a decedent during his last taxable year are deductible only on the final return filed in his behalf; such losses are not deductible by his estate.

Seehttp://www.legalbitstream.com/scripts/isyswebext.dll?op=get&uri=/isysquery/irl1a38/1/doc

See alsoSee also https://www.irs.gov/publications/p559/ar02.html#en_US_2015_publink100099527

How do you get Turbo Tax to enter all the longterm losses?

If you transferred last year's TurboTax return over, you don't have to do a thing—we've already entered it for you.

Otherwise, just open your TurboTax return, search forcapital loss carryover, and then select theJump tolink in the search results.

We'll take you to the screen where you can enter that info from your prior year return.

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I did that, but because date of death is 2020, the entire amount of capital losses should be taken, and TurboTax is only taking $3000. I 've tried everything I can think of, including overwriting the amount, but I am afraid it won't be accepted for e-file.

@rennermr

Are you preparing a final return for a decedent (i.e., a personal income tax return, Form 1040) or an estate or trust income tax return (Form 1041)?

If you are preparing a final 1040 for the decedent, the maximum net capital loss that can be deducted against other income is $3,000; there is no carryover and losses in excess of that amount are simply gone.

@rennermrwrote:

It was my understanding that all capital losses may be taken on the final personal return 1040.

That is incorrect as there is no difference with regard to capital losses on a final 1040 (the limit continues to be $3,000 to be deducted against other income).

Further, all assets are generally marked up (or down) to their fair market value as of the date of death. Obviously, that could involve unrealized losses being lost forever.

@BCpilotwrote:

You are wrong!!! Check the tax code for final return!!

Do you have cite for your proposition? I am certain that you do not.

I have Rev. Rul. 74-175.

See alsohttps://www.journalofaccountancy.com/issues/2017/jul/tax-planning-opportunities-final-tax-return.htm...

A capital loss carryforward is simply lost upon death.