Thanks for the info. The irs instructions are rarely very clear. Final year DNI(taxable income to the beneficiary), is gross income -allowed deductions(like rental loss, attorney fees, etc), where the income distributed can be chosen by the fiduciary for maximum tax benefit. In the final year, the estate cannot have any taxable income, as all was distributed, thus the exemption is not allowed. Is it true that if this wasn’t the final year that you wouldn’t be able to use the rental loss(assuming the estate income was low enough) to offset DNI?( but you would be able to use the deduction)
