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Pls help me understand cap loss reporting on estate trust tax return

Please help me understand the rudiments of reporting capital loss on estate trust tax returns.

I confess that I have not done my homework on the subject. I am hoping someone with lots of free time will be kind enough to outline the basics. I hope it is not too much trouble.

First, I ass-u-me that it is no different from reporting capital loss on personal tax returns. That is, we use Sched D or an equivalent form; and there are limits on how much cap loss can be reported in a year, with carry-overs to later years. Right?

If so, do the same dollar limits apply for estate trusts as for personal taxes? And do same capital gain tax rates apply?

I confess that I am not even up-to-date on how all that works even for personal tax returns.

Is it something like (I am asking about personal taxes as well as estate trusts):

  1. We can report up to 00 short-term net loss in any one year? The excess carries over to future years?

Is the amount of short-term net loss limited by the amount of ordinary taxable income?

Is there a limit on the amount that can be carried over?

  1. We can report only as much long-term net loss to offset short-term gain in any one year? The excess carries over to future years?

Is there a different limit on the amount of long-term net loss that can be carried over?

  1. The short-term capital gain tax rate is the same as the ordinary income tax rate, which I believe is different for estate trusts than for personal taxes, that is for amount, if any, that is not passed through to the personal tax return?

  1. The long-term capital gain tax rate is at most 15%?

Does the long-term capital gain tax rate depend on something? For personal taxes, I vaguely recall that it is lower (or higher?) depending AGI (less capital gain)? If so, is that true for estate trusts, too? If so, is the rate structure the same for estate trusts?

Reply to
curiousgeorge408
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The first thing you need to do is decide whether you are asking about an estate or a trust. They are not the same thing. You might use the term "estate trust" to refer to a trust created as part of an estate plan, but you haven't made that clear. So we don't know what kind of entity you are asking about.

If you're asking about a trust, you need to tell us whether it is a simple or complex trust, and whether capital gains and losses go to corpus or income under the trust instrument.

Then you might get some useful answers.

Katie in San Diego

Reply to
Katie

Sorry for the confusion. I wrote my initial posting while I was at work, and I did not have the information before me.

I am asking about Form 1041 "US Income Tax Return for Estates and Trusts".

We have a professional prepare the tax returns. But since we are between CPAs, I have no one to ask these questions in a timely manner.

I am actually asking about the tax returns for two trusts, one simple and the other complex -- the Survivor's Trust and the Decedent's Trust of an original AB trust before my father's death.

The Survivor's Trust is treated as a pass-through entity. So I imagine that my questions about the treatment of capital losses are simply questions about the handling of capital losses on Form 1040 Sched D. I can gronk that.

The Decedent's Trust is not a pass-through, and we do not expect any distributions to the survivor, my mother. But now I see that there is Sched D for Form 1041. So I guess I can get my answers by reading the instructions for that form.

But I would still welcome any answers that anyone wants to provide, if only to confirm my understanding of what I will read.

Reply to
curiousgeorge408

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