Can the long-term capital loss associated with relator fees on the sale of an inherited home, subsequently reported on a K-1, be deducted on my personal taxes when the only income from the inheritance was interest from a bank account earned on the proceeds from the sale on the inherited home?
I am filing a final 1041 this year for a trust directly related to the death of my parent in 2018. I made the final distribution in 2019, which included approximate $50 in interest on a bank account that held the money from the sale of an inherited house. The business version of TurboTax instructed me in 2018 to record a long-term capital loss against the sale of the house because of the Relator (and other legal) fees incurred by the sale. Now, because I am filing the final 1041 for the trust for 2019, the business version of TurboTax is instructing me to distribute the long-term capital loss on the K-1s being produced for myself and my siblings. However, allowing the deduction on my personal taxes due to fees associated with the sale seems counter intuitive. The home was sold at a stepped up basis due to inheritance. It was not lived in after the death, and was never used as a rental.
So, can I actually use the fees associated with the sale of the property that was inherited, as a deduction against my personal income in 2019 (because I did not receive the full stepped up basis)?
