Form 1041, Sch D

A few years ago, my mom bought some stock for $100K. A couple of years later, she died and the stock was worth $70K. 9 months later, the stock was sold for $80K (to help pay the Form 706 estate taxes). Now, when I fill out the estate income tax return, Form 1041, Sch D, do I show a loss of $20K ($80K-100K), or a gain of $10K ($80K-70K)?

My reading of the 1041 instructions says it must be a gain as the basis is the value at time of death.

If I am required to show a gain, what happened to the ($70K-100K) loss? Is it just gone when she died? If so, that means one should sell their losers every year and try to use those losses on a 1040.

Reply to
Fred J. Tydeman
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You are correct. You have a $10,000 long term loss. Yes the $30,000 is lost and gone forever.

ed

Reply to
ed

A gain of 10k. Strange, a lot of web sites tax about step-up of basis, but few talk about a step-down. What's more: any wash sale carryovers are also lost.

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Death of the taxpayer

If the taxpayer dies and capital loss carry overs are not used up the taxpayer's estate may not deduct the remaining capital loss. An unused individual capital loss may not be carried over by a surviving spouse.

Reply to
removeps-groups

Were did a 10k loss come from? It's either 10k gain or 30k loss. Am I missing something?

Reply to
removeps-groups

When Mom died, her cost was not the issue. Step up in basis takes care of that. So, she passed and the stock was worth $70K. Ok, but is there not an alternate valuation of 6 months later? Since it was sold 9 months later, this may or may not help, but odds are, the later valuation would be higher, and the cap gain less than the $10K we are discussing. JOE

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Reply to
joetaxpayer

If that's true, you might be able to justify the actual sale price as the value on the alternate valuation date. The problem is that you have to elect the AVD on the 706, and the values on that date will apply to all assets of the estate.

Stu

Reply to
Stuart Bronstein

"Were did a 10k loss come from? It's either 10k gain or 30k loss. Am I missing something? "

No, sorry. it obviiously should be a gain, not a loss, of $10K.

ed

Reply to
ed

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