@gnm9135 , I have gone through the ref you provided and my opinion is based on :
I.R.C. § 1212(b) Other Taxpayers
I.R.C. § 1212(b)(1)
In General —
If a taxpayer other than a corporation has a net capital loss for any taxable year—
I.R.C. § 1212(b)(1)(A) —
the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and
I.R.C. § 1212(b)(1)(B) —
the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year.
that the longterm character remains intact to the extent it is not extinguished by short-term losses. Thus K-1 code C should be applicable -- however the maximum applicable per year is still the $3000. In some ways I wonder , ( unless of course the beneficiaries are in need of , and can use, the losses for the future years ) why bother with this -- the basis of the property is either the valuation at the time of death or alternate date chosen by the trustee and therefore if the house sold for $XXXXX , why not use the FMV as that ( any appraisal not withstanding ) -- makes life a lot easier. Also note that if the property was never used for business, then it could be classed as personal property of the beneficiaries and therefore no loss is recognizable ( only business / investment losses are allowed ). Does this make sense ?
