Estate NOL

[beautyqueen]

What is considered an eligible loss for an estate? If the estate's only income is interest income from the life insurance policy and the only deduction is attorney fees and these exceed the interest, does that constitute an NOL that can be passed through to the beneficiaries?

[Snaggletooth]

Beauty Queen, eh?

What you have described is a loss of corpus. Nothing happens with the beneficiaries until they receive a distribution.

If this is the only event, the beneficiaries can take the loss through K-1s in the year of distribution.

Good thing they don't allow pictures....

[beautyqueen]

Estate NOL

It's going to create a several K $ loss so just wanted to make sure it was eligible.

Since this is the initial return of the estate, is the 1045 required to be completed with the 1041 to show the carryover? What is business vs. non-business for estate?

Thanks for your advice. No pictures...

[Davc]

What is considered an eligible loss for an estate? If the estate's only income is interest income from the life insurance policy and the only deduction is attorney fees and these exceed the interest, does that constitute an NOL that can be passed through to the beneficiaries?

No. An NOL for an estate is calculated the same general manner as for an individual. The type of loss resulting from your scenario is lost except in the final year when it is passed through as "excess deductions on termination" which the beneficiaries can take as a 2% misc. deduction.

[beautyqueen]

Estate NOL

So, since this is the first year and there will be one final year, the "excess deduction" is a loss on line 22 (no taxable inc), but technically lost (no pass thru). And, nothing to file but 1041. Correct?

[S T]

See

Take a look at Pub 536 and it will explain how to report the NOL

Sandy

[Davc]

So, since this is the first year and there will be one final year, the "excess deduction" is a loss on line 22 (no taxable inc), but technically lost (no pass thru). And, nothing to file but 1041. Correct?

Yes........

[Davc]

Take a look at Pub 536 and it will explain how to report the NOL

Sandy

No business or rental activity. There is NO NOL!!!

[beautyqueen]

Estate NOL

Thanks davc. Good advice!

[beautyqueen]

Estate NOL

One other question on the form itself, does the line 22 include the $600 exemption. The instructions refer to not including the exemption, but is that just if it is actually an NOL then used on 1045 form?

[Davc]

One other question on the form itself, does the line 22 include the $600 exemption. The instructions refer to not including the exemption, but is that just if it is actually an NOL then used on 1045 form?

The exemption is not part of the excess deductions on termination in the final year, but it is part of the line 22 amount.