I have completed a form 3115 for a rental property in a Trust with a 481 (a) adjustment for depreciation that was never claimed in the past six years. The property was not rented in 2020 but was sold and the proceeds distributed to beneficiaries. There is a gain on the sale of the poperty of $40K (rounded) and cumulative unclaimed depreciation of $55K. This adjustment is reported on Schedule E as other expense. Combining the negative adjustment of $55K with the gain on the sale of property of $40K results in a net loss of $15K. This is the final year of the trust. Can the $15K loss be distributed to the beneficiaries? Thank you.
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