Can you please provide regulation or other authority for your "pseudo exception" for grantor trusts? That is the exact situation I have. Client with a grantor trust had capital losses which were reflected on her 1040 and resulted in carryover. Client passed away shortly after and the trust is now a complex trust and this year has significant capital gains and we are trying to find authority that the unused carried over losses from the 1040 related to the trust's capital losses can now be used on the 1041.
