Do I enter proceeds from sale of house on K-1 or just capital loss? Should estate still show capital loss of $3K even though loss is being passed to heirs on K-1?

[sjftt]

Sold deceased father's house and distributed funds to heirs. House sold for less than FMV. There is no income for estate. As executor of estate, I am preparing 1041 and K-1s. Do I enter proceeds from sale of house anywhere on K-1 or just capital loss?

I keep getting a warning about the final return distributions not being enough to distribute all of DNI and DNAMTI.

Should estate still show capital loss of $3K even though loss is being passed to heirs on K-1?

[tagteam · Accepted solution]

"Do I enter proceeds from sale of house on K-1 or just capital loss?"

You would enter proceeds from the sale of the house, selling expenses, basis, and all other information relevant to the sale on Form 1041. 

If you are using TurboTax Business, you should use Home Sales (Federal Taxes tab>>Income section).

"Should estate still show capital loss of $3K even though loss is being passed to heirs on K-1?"

It is typical behavior for TurboTax Business to show negative $3k on Line 22 despite the fact that, on the final return, losses have been passed through to beneficiaries on K-1s.

[sjftt]

Should the K1 show the capital loss in box 11 code c and also show the negative of that amount in box 12 code d?

[tagteam]

I do not believe so; you must have entered something else since that is a tax preference item (AMT).

[sjftt]

So now the AMT item is gone from the K-1, although I have no idea what I did to put it there or take it away. I entered the amount of money that was distributed but it isn't showing on the K-1, only the capital loss. Any idea where I went wrong?

[tagteam]

Go into Forms Mode and check your K-1. See the screenshot in the answer below.

[sjftt]

I still don't know if I am seeing the correct information on the K-1s. Proceeds from the sale of the house and car were distributed to the beneficiaries. For tax purposes, there was a capital loss. I entered everything in all the right places within the software. What should I see on the K-1, the capital loss, the distributed proceeds, or both?

[tagteam]

What you should not, and will not, see on your K-1 is any distribution of principal (corpus). Your K-1 is only going to show items of income, deductions, gain/loss, credit, and a few informational items.

For example, if the car had a basis of $10k and you sold it for $10k, for a gain of $0, then that $10k distribution (of presumably cash) to the beneficiary would not appear on the K-1.

If the house had a basis of $200k and the estate sold it for $180k, for a loss of $20k, then the K-1 would only show the $20k loss, not the entire proceeds of $180k (again, presumably cash from the sale) that was distributed.

[tagteam]

Make sure your Beneficiary's Allocation Smart Worksheet is completed correctly.