Estate sold residence that belonged to the deceased. There was a loss of $127,000. When I put the information on Schedule D, it shows a loss of $3,000 and the balance is carried over. It was my understanding that the loss flowed through to the K-1's. If that is correct, how do I report that on the K-1's. And there is $128,000 that was received on the sale of the house. Do I report that somehow on the K-1's as well? Is it a required distribution? If so, does it go on Schedule B, line 9 or on the tax exempt line 10? This is not the final return for the estate.
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Capital losses do not carryover to the K-1's and therefore to the TP's (bene's) return until the final year of the estate. So it remains on Page 2 of Sche D-1041, under fiduciary column. Also, the loss seems rather large. I am finding these are most unrealistic. You should not use the tax assessment as FMV. If the house was sold soon after the decedent's death, the FMV was probably pretty close to the sell price. Also, I do not understand what you mean by Sche B, line 9 or tax-exempt income. These have nothing to do with the sale of residence. Are you filing Form 1041 for the estate? Once the capital loss does carry over and is disseminated to the beneficiary's via the K-1, it will flow thru to their 1040 and may be limited to $3K per year if there is nothing to offset it. -
Estate Returns-Loss on sale of residence
Thank you so much for the information. The question on schedule B was for the money received on the sale of the house. Is that a required distribution for this year or for the final year? Also, the loss on the house is correct. The decedent died in 2008. I urged the beneficiaries to have an appraisal done at that time, which they did. They sold the house for less than FMV.Comment
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Ok. I realize now you are talking about Schedule B of the 1041, not the 1040. However, the tax exempt question (#2) refers to dividends or interest, not the sale of the residence. IF distributions were made to the bene in cash during the estate year (calendar or fiscal), then you complete the entire section of Sche B to determine if any taxable income flows thru to the K-1. However, the loss on the residence will not affect this other than the $3K which is showing up on Lines 9 on the front of 1041 and Line 6 on Schedule B. The rest is carried over and will be used by the estate each year it stays open. When it terminates, unused excess will go to the bene's. The sale of the house is not a required distribution. Distributions are optional and decided by the executor/fiduciary, and would be anything actually paid to the bene's.Comment
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