I now understand that the 663(b) election can be used to make the final distributions from the trust effective for 2023 so long as we complete the distributions within 65 days from the close of 2023. (Thanks for pointing that out! It will be helpful!!) But I'm still wondering about a beneficiary's ability to utilize capital loss carry forwards that are allocated on the K-1s from the Trust to reduce a beneficiary's taxable ordinary income for 2023. The Trust will already have utilized $3,000 of capital losses on the Trust's 2023 1041 return to reduce the Trust's taxable income for 2023. $3,000 is the maximum amount of capital loss carry forwards that can be used to reduce ordinary income for the Trust. Will allowing a beneficiary to reduce the beneficiary's ordinary income in 2023 by applying the loss carry forward from the Trust's 2023 K-1 violate that $3,000 annual limitation since it would mean that more than $3,000 of the Trust's loss carry forwards would have been used to reduce ordinary income? Or does that fact that the loss carry forwards will be on a return for a trust beneficiary and not the trust itself allow for a second reduction of ordinary income up to $3,000?
