1041 K-1 NOL

We received a California Prop 19 property tax reassessment 2/2024 (upon death of surviving spouse) valuing the trust's real property (held for 30 years) at $1 million. We subsquently paid the back property taxes due upon notice of that reassessment, and are now subject to taxes at the new established value.

We are preparing the 2024 1041 and 1041 Sch D; there is no other income or expense.

Question:

A. If during 2024 we sold the house for $1.1 million (net of associated expenses), we'd obviously argue/use the reassessed value as the basis to derive a (long term) capital gain of $100k.

B. However, if we sold the house for $900k, would the reverse be true? That is, would you claim a $100k long term capital loss and distribute the NOL accordingly to the beneficiaries?

Assuming that is the case, each beneficiary K-1 NOL would be applied either against their own LT capital gain, or be subject to the $3k deduction limit against ordinary income.