Estate capital gain

[SHB3606]

Using TT Business for father's estate. Both his stock holdings and house have stepped up basis as of date of death (and both are long term - decades) .  When I sold the stock, we had long term capital gain of $75,000. For the house, we sold within 4 months of death and used the contract price as date of death FMV. We incurred typical home sale costs (commissions, fix-up costs, etc.) that were deducted from the sale price to come up with a long-term loss on the house. Don't the home sale costs count as a long-term loss that can offset the stock long-term gain? 

[Anonymous_]

Are you making distributions to the beneficiaries?

The loss on the sale of the home (assuming it was not held for personal use by the estate) can be passed through to the beneficiaries on the final 1041.

[SHB3606]

correct - it was not was not held for personal use by the estate. So, the K-1 shows a net long-term capital gain for each beneficiary. How do we demonstrate the passed-through loss? is that just a list of the expenses from the 1099-S and receipt for fix-up costs?

[Anonymous_]

Is this the final return for the estate?

The estate cannot pass through losses to the beneficiaries until it is terminated and files its final return.

[SHB3606]

yes, this is the first and final return for the estate. How do I pass through losses to the beneficiaries? 

[Anonymous_]

Are you using TurboTax Business?

Make sure you have indicated that the return is the final return and also make sure to enter your distributions in that section of the program.

[SHB3606]

yes, I am using TT Business and I have said 'final return'.  When I enter distributions, do I enter them as a negative number to reflect the loss?

[Anonymous_]

Yes, but do you not have capital gains to distribute?

Note that you need to go through the capital gains allocation section.

[Anonymous_ · Accepted solution]

Also, you may find it necessary to enter Forms Mode and input the exact percentage of the beneficiary's distribution on the K-1 (this is somewhat of a program quirk).