Q. How, if at all, do the various answers to this question change in the case of a special needs trust which has a large exemption which reduces taxable income (without applying any capital loss carryforward from the previous year) to zero?
A. Essentially, for a trust, the pre 2018 calculations still apply. That is, you are allowed to use the exemption ($4300 in 2021 for a special needs trust) to reduce your taxable income before applying the capital loss. So, more of the capital loss may carry forward. A different Capital Loss carryover loss worksheet (incorporating the exemption) is used for trusts. See page 11 at https://www.irs.gov/pub/irs-pdf/i1041sd.pdf
