Help with 'excess deductions' & 'long term capital loss carryover' from a final K-1 as a beneficiary. What do they apply against & how do I use the losses in the future?

 
AmandaR1
New Member

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Excess deductions are deducted this year, but they are an itemized deduction for investment expenses. This means they will only impact your return if your total itemized deductions are greater than the standard deduction. Be sure to enter everything you have under Deductions & Credits before evaluating if you qualify.  

These amounts can only be entered this year. You can read this at the IRS instructions here: 

Box 11, Code A—Excess Deductions on Termination If this is the final return of the estate or trust, and there are excess deductions on termination, you may deduct the beneficiary’s share of the excess deductions on line 23 of Schedule A (Form 1040) as a miscellaneous itemized deduction subject to the 2% floor.

See page 2 here: https://www.irs.gov/pub/irs-pdf/i1041sk1.pdf

Your long term capital losses from box 11c are different. These are passive activity losses, which you can carry forward to offset passive income and you can deduct up to $3,000 each year from all other types of income you have. You'll see this being deducted on your personal form 1040 line 17

Let me know if you have any questions in the comments below. 

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Do I enter $3,000 or the entire amount from 11c for this year and what about successive years?

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Because my itemized deductions including the Schedule K-1, Box 11, Code A are still less than the standard deduction, is there no amount reflected for the K-1 on my amended return.  Only the name and id # of the terminated trust appears.