Form 1041-what form do I use after the fbo died in 2019 ofr income & capital losses AFTER her daeth

[gig3491]

History:

Upon my father’s death in ~1990, the Trust was set up with $200,000 principal in accordance with the Trust document. My sister Marcia Mehlman & I were Trustees. I managed the trust investments.

• Each month Estelle was sent a check from the Trust for the month’s income (interest & dividends) and a copy of the monthly brokerage statement.
• The STCG & LTCG’s were retained by the Trust & reinvested.

Each year, I prepared Form 1041, including Estelle’s K-1 for the interest & dividend checks sent to her during the year. I sent Estelle a copy of the brokerage 1099. The trust paid any taxes due on the STCG & LTCG’s – Federal & Arizona state tax.

Current 2020 Developments:

At the end of March 2020, Estelle passed away. I sent January & February 2020 checks to Estelle. I sent Estelle’s March 2020 check to her grandson – the final check.

In May 2020, as trustee, I sold the securities in the trust brokerage account – proceeds $297,610.84.

In May 2020, I distributed the proceeds from the sales of securities & income after March 31, 2020 as follows:

            Gerald Greifer (1)                  50%          $149,691.62

            Brett Mehlman (1) (2)           25%            $74,845.81

            Andrew Mehlman (1) (2)      25%            $74,845.81

                                                            Total          $299,383.24

• Trustees [Brett replace Marcia Mehlman after her death].
• Andrew & Brett are Marcia Mehlman’s sons who received ½ each of her 50% share upon her death.

During 2020, the Trust account’s total dividend & interest income amounted to $2,735.85 allocated as follows:

            Estelle Greifer                   $1,327.94

            Trust                                  $1,407.90

Questions for 2019 Tax returns:

1. I know that Estelle’s income $1,327.94 go on the 2019 Form 1041 & her Form 1041 K-1.
2. I am not sure how to file with the IRS net losses on the sales of securities and Trust account income after Estelle’s death:
   1. Form 1041:
      1. Do I show this information on the 2019 Form 1041?
      2. Prepare K-1’s for Andrew, Brett & me?
   2. Or is there other tax forms I need to prepare?
3. Since the net losses on the sales of securities are LTCG, will this be subject to the $3,000 limit on our personal returns?

[Anonymous_]

You might want to consider filing Form 56 and Form 5495 (links below).

https://www.irs.gov/pub/irs-pdf/f5495.pdf

https://www.irs.gov/pub/irs-pdf/i56.pdf

If this is the final return for the trust, you might want to seek professional guidance to ensure any loose ends are tied and the procedure is followed correctly for both state and federal filings.

Net losses, this being a final return, can be passed through to the beneficiaries and the net loss passed through can be netted against the beneficiaries' capital gains (if any) with the excess (limited to $3,000) being available to offset other income.