Excess Deductions

[TAX4US]

TP received K-1 from estate final year. excess deductions being placed on schedule A not subject to 2%. Creating a large negative income. Is this a business deduction not allowed for calculating the NOL? I cannot find where it is allowed.

[Bees Knees]

Misc itemized deductions must be business related to be treated as business deductions for purposes of an NOL. If the estate was operating a business and the excess deductions flowing through the final K-1 are a result of unused business losses, then they can be treated as business deductions for NOL purposes. Otherwise, the excess deductions of an estate are usually not business related and cannot be used as business deductions for NOL purposes.

[TAX4US]

After seeing the estate accounting today I came to the same conclusion. Thanks for affirming my thoughts.

[Burke]

TP received K-1 from estate final year. excess deductions being placed on schedule A not subject to 2%. Creating a large negative income. Is this a business deduction not allowed for calculating the NOL? I cannot find where it is allowed.

Note that excess deductions passing through from an estate go on Line 23, subject to the 2% haircut. Not on line 28.