GWG Wind Down Trust Grantor Letter

[srichard56]

I am working on my 2024 Taxes with Turbotax Deluxe.  I received from ETC Brokerage Services that includes a GWG Wind Down Trust Grantor Letter.  It shows Interest Income of $3.97, Attorney Fees of $73.71, Administrative expenses of $46.15 and at the bottom a Realized Loss on Marketable Securities of -5,625.12.  I am really mainly worried about how to enter the loss.  I need to know specifically where and how to input this in Turbotax.  I also have a second letter for my wife's separate account.

[BrittanyS]

Capital gains and losses are reported on the Schedule D of the 1040.  To enter in TurboTax, follow these steps:

1. In the search box, type "capital loss carryover."  Enter precisely how it is shown here and click find
2. Click "Jump to capital loss carryover"
3. Enter information for your loss

[EDW1]

I have the same letter from GWG with different amounts and read that the info should be entered on form 1041(K-1) and TurboTax would move it to the correct forms. I am totally confused. I would think the Interest would go on Schedule B and Loss on Schedule D, Expenses on Schedule A. Do I enter it directly on the schedules and skip creating the K-1?

[srichard56]

This document that I received is called a Grantor Letter for the year 2024.  It shows the following info:  Interest and other income, fees and expenses which are all less $160 total and finally Realized loss on marketable Securities which is significantly larger.  Also in TurboTax it refers to 2023.  There are no line numbers shown on the document and I don't know whether this is considered long or short term.

[srichard56]

I tried your suggestion.  I am using TurboTax deluxe for my 2024 tax return. It had me enter info from my 2023 return.  Then nothing else happened, no place to enter the numbers on the Grantor Letter.  The loss is from calendar year 2024.

[PatriciaV]

You would enter the information reported on the Grantor Tax Advice Letter as if it were reported to you on a Form 1041 K-1.

The easiest way to find any section of TurboTax Online, is to open your return, go to Tax Tools in the left column >> Tools >> Topic Search. Type in your topic, click the topic in the list and then GO to go directly to the start of that section. In TurboTax for Desktop, use the Search box or Show Topics.

Use the following steps to enter this information:

• Answer Yes to add a new K-1.
• Choose Start beside Estates or Trusts (Form 1041) and enter your information.
• After you have entered the initial information about the trust, you will get to the section where you can select the boxes to fill in.  
• Put a check beside Boxes 1-5.  This will allow you a place to enter long-term or short-term capital gains/losses (box 3 and box 4a). The information will be transferred to the appropriate section of your Form 1040.  

A lot of grantor letters include expenses which can't be deducted and are purely informational. This includes attorney fees & administrative expenses.

[EDW1]

Thank you
this is the exact information I needed.
Wish the company had included an K-1 along with their Grantor letter. 

[srichard56]

Patricia, In TurboTax Deluxe 2024 it takes me to 2023 carryover, not for imputing losses for 2024 Taxes.  Do I have to use TT Premiere to do this for Grantor Letter loss for 2024 taxes?

Also I had just entered the total Grantor Loss using TT Deluxe as a capital loss under investment income as a loss as shown on the Grantor letter. Once input TT a $3000 capital loss with remaining carried forward to 2025.

Which way is correct and what would the affect/difference be?

[PatriciaV]

Yes, if you are using TurboTax Online Deluxe, you will need to upgrade to TurboTax Premium in order to report the 2024 Grantor Letter. TurboTax will prompt you to upgrade when you try to add a new K-1.

It's important to enter the income under the Schedule K-1 section so the income is reported as passive. This includes the capital losses, although you are limited to claiming no more than $3,000 of capital losses each year. If you have other capital gains for the year, some of the pass-through capital loss may be offset by the gains. Any excess capital losses are carried over to future years.

[Enginr4]

Hi, I'm in the same situation with this GWG letter.  I know the letter says 'realized loss' but why wouldn't we have received a 1099 or a K-1 if that's what we are supposed to report in 2024.  I'm wondering if this letter is just an FYI of losses so far and we will get an actual 1099 in the future when the wind down trust settles and pays out what we have left.  Today, I don't know that any shares have been sold to call it a capital loss.

This whole GWG mess confuses me.

[srichard56]

I just read another post that says if the GWG L bonds were issued inside an IRA, the loss is not deductible.  Not sure if this is correct but may be why we haven't received a 1099 or L1 form.

[jrmc1]

Thank you very much, PatriciaV, for this helpful info.  It's just what I needed for our 2024 tax return.  I followed your directions for adding our Grantor Letter details to form K-1.

We also received a similar Grantor Letter last year (2023) but didn't receive it until after filing deadline and us having filed our 2023 Tax Return.  It contains some similar categories, but also contains items listed as:

Passive Income (loss) from Business

Other income, Interest and other income

Deductions (Attorney and accountant fees and Admin costs...) - but I understand from your 2nd post that they can not be deducted on Return)
Loss on Life Insurance Policies, Net

Interest Expense

Management Fee (assume this is not a deductible item)

Total Passive Income (Loss from Business) - Note this "total" is close to the amount shown on Passive Income (loss from Business, shown as 1st Income Item above.

Should I Amend my 2023 return and add a K-1 form?  Or can I somehow include it in our 2024 K-1?  After entering the K-1 info, I am now at an another screen that asks for "Passive Loss Carryovers from 2023", Regular Tax and Alternative Minimum Tax.

T

[DianeW777]

Yes. An amended return should be completed for 2023 because you cannot use the 2023 form on your 2024 tax return. If any losses do increase or create a carryover, then you may need to amend your 2024 if it's already been filed.  

If you haven't filed your 2024, then you can wait to see what the numbers are for the amended 2023 and use the correct numbers if anything changes in relationship to carryovers.

• How to amend (change or correct) a return already filed?
• What is the deadline for filing an amended return?

@jrmc1