Business & farm

@DABny @blesher1

DABny sent me an email to point out that all of my exhibits to answers were lost in the transition from one Intuit answer board to another.  

I apologize for not following up or even being around this year.  Since early January, 2020, my retirement ended and I have been in the midst of FEMA and state Covid-19 task forces - and frankly where I find myself now having to be between running 8 to 9 Zoom conferences where herding 40-60 cats over a 3 hour session takes time and other responsibilities of policy -- I just have no time this year to be here.  If you really need a missing exhibit to any answer send me an email

I've attached a PDF which is an update last year that goes both ways on gain or loss of an asset of a Decedent and how to report it on Form 1041, in this case the sale of Decedent's personal residence (no, it then becomes an investment asset no longer personal residence)

UPDATED FOR 2018 Tax Year (2019) - ANSWER IS SPECIFIC TO EXECUTOR FILING FORM 1041 NOT 1040

Specific answer for where the sale of the decedent's residence is sold in the FINAL year of filing for either the decedent or the decedent's estate.  NOTE that the sale of a decedent's personal residence is reported on FORM 1041 and not Form 1040 if the Estate sells the home.  Form 1041 is not supported by TurboTax personal products but instead by TurboTax "BUSINESS" desktop product.
If the home is inherited by the beneficiaries, and the beneficiaries then sell the home, this question and its answers do not apply and instead, the beneficiaries report the sale as if it was the sale of an investment asset on their own personal Form 1040.

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Eight images - step by step

#1:  Schedule D entries showing the loss on sale of house
- An inherited asset by law is deemed to be held long-term with value as of date of death

#2: Form 1041 page 1 - proforma allocation of maximum of $3,000 write-off of loss against any possible income - whether or not

#3: Schedule D Part II - Calculation that results showing Long-Term Capital Loss

#4: Schedule D Part III  - Loss represented

#5:  Capital Loss Carryover - will stay within Estate until distributed out to Beneficiary

#6: Amounts to Allocate to K-1, Worksheet - the loss showing in 11C is available to allocate; this does not mean you have yet allocated it - at this point it is still in the Estate

#7: K-1 for Beneficiary before you plug in to the Allocation Smart Worksheet the percentage to be allocated to this beneficiary - not that no loss is allocated at this time#8: 

#8: In Beneficiary's Allocation Worksheet in the K-1 - plug in the percentage to allocate to this beneficiary - example here 100% - and magic!!! the loss is allocated on Line 11 Code C.