Received Schedule K-1 (Form 1041) from a trust

[mandsan]

I received a K-1 from a trust which I was a part of an inheritance.  I am disabled, so I do not have any taxable income.  It's showing in Box 11 D: $24,475. (Long-Term Capital Gains Loss) . When I amended my tax return my adjusted gross income went from $0 to -$3000. I was under the impression that I could use this loss for a future tax year when I have something taxable. For example, I have an investment account, and if I make a withdrawal in tax year 2026 and there is a tax on the capital gains then this would help lessen my tax burden.  Am I correct?  If so, how would I do that?  Or is this something I don't even need to claim on this year's taxes?

Furthermore, my 11 year daughter also received the thing, but for $12,237.  Do I need to file a tax return on her behalf, and do this carryover until she is legally able to work?

Thank you very much.

[Mike9241 · Accepted solution]

It's showing in Box 11 D: $24,475. (Long-Term Capital Gains Loss) . When I amended my tax return my adjusted gross income went from $0 to -$3000.  

this is correct. the trust had a capital loss carryover when it terminated and that passes through to the beneficiaries. your share being 24475. the limit on capital loss deductions is $3,000 per year. that's why you are seeing this number. however, in fact. since you have no other income none of that $24K is used and can be carried forward indefinitely. There is no way of knowing if this will provide you any tax benefit in the future but to be able to use if if you do you need to report it on your retrun.

The same with your daughter. however, she probably will get some tax benefit in the future since up to $3000 per year can offset other income she may have in the future like wages, dividends, interest and any other taxable income including future capital gains. Turbotax free edition doesn't handle this type of reporting, so there would be fees to upgrade.

You may want to try IRS free file yo too. 

[mandsan]

Thank you so much for the fast response!

Just to clarify, I should go ahead and report the K-1 on my taxes this year, and do I report this same amount next year, and the year after, etc, until I've exhausted the total $24,475?  Also, am I understanding this correctly - even though I'm adding it on this year's tax return and a $3000 deduction was applied, since I had no taxable income, then none of the $24,475 was used?

Thanks again for everything.

[PatriciaV]

No, you don't need to report this K-1 loss again after this year. TurboTax will carry the loss forward to future years and try to offset other income when allowed. The carryover amount is shown on Form 8582 page 2.

If you had no other income this year to offset the K-1 loss, the entire amount will be carried forward.