Amy, Bob and Charlie can treat the sale as investment property and deduct the loss on their tax return (capital loss, subject to the $3000 rule), but Donna can't deduct the loss
You've got to be careful with these hypotheticals because they can be misleading when the person writing them is not well-versed in this area of the tax law.
If there is any personal use by a beneficiary with the consent of the other beneficiaries, who are almost always related, then the property is considered to be held for personal use by all and none would be able to deduct a loss on the sale; the property would not be considered investment nor business/rental property.
