How does nominee/decedent (i.e. me the Executor) pass capital loss to Estate, then Estate to beneficiaries?

[davidsson]

Note:  The loss is in a revocable/living trust account, whose final taxes will be completed with the decedent's return (for income prior to death) and with the new trust (with new TIN) and estate under a 645 election (after completing form 8855) for after-death income.  I'm not sure that makes a difference, but thought I'd include just in case it does...

What little I could find showed the decedent can not pass on the loss... that the loss would stay with the decedent's tax return even though the sale/loss was after the decedent passed.

This doesn't seem correct, so I'm probably wrong.  If I'm wrong, what form does the decedent (me the executor) use to pass on the loss?  I understand I need to transfer 1099-DIV and 1099-INT income but do not understand how I would pass on the loss. What would I do?

What is correct?  ANY advice is appreciated.

Note:  These are funds from the sale of a defunct (Puerto Rico Power) bond that could not be transferred and had to be sold to close decedent's account when assets were transferred to beneficiaries.

Thanks in advance!!

[AmyC · Accepted solution]

The estate began when she passed. Everything sold after her death should be estate based already but if it isn't, you can file a matching form to move the money. 

See General Instructions for Certain Information Returns (2023)

Nominee/middleman returns.

Generally, if you receive a Form 1099 for amounts that actually belong to another person, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received) for each of the other owners showing the amounts allocable to each. You must also furnish a Form 1099 to each of the other owners. File the new Form 1099 with Form 1096 with the IRS Submission Processing Center for your area. On each new Form 1099, list yourself as the “payer” and the other owner as the “recipient.” On Form 1096, list yourself as the “Filer.” A spouse is not required to file a nominee return to show amounts owned by the other spouse. The nominee, not the original payer, is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.

I am so sorry for your loss. We are glad to help.

[davidsson]

Thank you so much!!