Capital Loss Carryforward

[DTS]

I am a little confused about the loss carryforwards the year after the death of a spouse.

Does this pertain to ALL carryforwards because of past joint returns or just the ones owned by the deceased spouse? Wording in Pub. 544 is a little vague to me.

Thank you,
Dennis

[Bees Knees]

Pub 544, page 34 says, "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 yearly limit
discussed earlier 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."

This rule would only apply to the capital losses of the deceased spouse. If they owned the property jointly and it generated a capital loss, the surviving spouse would still get to deduct capital loss carry forwards. So the rule only applies when spouses own the capital assets separately.

[DTS]

Bees

This may be very good news for my client! I will check to see if this stock was owned prior to the marriage or was purchased with joint funds. I do know that a couple of accounts were in the husbands name only, so I'll do a little digging.

Thanks for the help.
Dennis