A number of years ago (5), a relative needed to move from her home into assisted living. An irrevocable trust was established at that time to potentially shield some of her assets. (I am the trustee.) The condo that she owned and had been her primary residence was moved into the irrevocable trust at that time. She passed away 2 years ago and the condo was sold in 2024.
During the time between the trust assuming ownership of the condo and the date of the condo sale, no one was living in it on an extended basis. However since I live in another state, I would stay there for several weeks at a time several times per year when I would visit. Just prior to the sale, a water pipe burst in the condo above which caused significant damage the our kitchen. Rather than spend the time and money to repair the damage, we sold the condo "as is" which resulted in a significant loss. (Insurance covered only a small portion.)
Turbo Tax Business passes the loss through to the beneficiaries on their K-1's, but is that allowed by the IRS? It appears that the courts agree that it is a loss to the trust, but the IRS perhaps does not.
How should this ultimately be handled?
