taxpayer died july 1, 2009 with $70,000 of long-term loss carryforward from 2008. Taxpayer had annuity in living trust. taxpayer's beneficiaries sold stock for a loss after taxpayers death. gain on annuity is $100,000. Is there any way to use the carryforward loss and/or the current 2009 loss against the gain on the annuity?
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TTB page 6-9 says:
Sorry, those are the rules.Death of taxpayer. Capital losses cannot be carried over after a
taxpayer’s death. They are deductible only on the final income tax
return filed on the decedent’s behalf. The annual $3,000 ($1,500
MFS) limit still applies in this situation. Even if the loss is greater
than the limit, the decedent’s estate cannot deduct the difference
or carry it over to following years. -
What About the Annuity?
The annuity is also IRD stuff.
The character of the income would determine whether the 70K in losses could offset the 100K in income.
Most annuity income is reported as "retirement" income. If this is the case, the answer is "No, only $3000 can be used to offset."
Is there any way to convert annuity income into capital gains?Comment
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