winding up trust with loss carry forwards

a trust has had net losses for several years, primarily due to commercial real estate. The trust will be wound up, either distributing the real estate and few other assets to the beneficiaries, or selling the real estate and distributing the remaining assets of the trust. If the real estate is sold, the loss carry forward may be reduced, but will not disappear.

I believe the loss carry forward is allocated to the beneficiaries upon trust termination. Is this correct?

If so, are there any limitations on each beneficiary's use of the loss carry forward? Can it be carried back on the individual's tax return? Used without limitation in the current year? Carried forward?

Thanks.

Reply to
Pico Rico
Loading thread data ...

Yes, on line 11D and 11E of 1041 K-1.

My understanding is that you report the loss as negative income on Line 21 of your 1040. I think you only need to use up as much NOL as will reduce your taxable income to zero -- ie. income minus exemption minus itemized deduction equals zero, but will need to look this up, because even if your taxable income is zero you might have tax because of AMT. The rest is carried forward. Total NOL must be used up in 20 years.

Also, you may carry back your NOL for 2 years, filing an amended return. But if you choose to only carry forward, you must file an election to do so.

Reply to
removeps-groups

Yes, on line 11D and 11E of 1041 K-1.

My understanding is that you report the loss as negative income on Line 21 of your 1040. I think you only need to use up as much NOL as will reduce your taxable income to zero -- ie. income minus exemption minus itemized deduction equals zero, but will need to look this up, because even if your taxable income is zero you might have tax because of AMT. The rest is carried forward. Total NOL must be used up in 20 years.

Also, you may carry back your NOL for 2 years, filing an amended return. But if you choose to only carry forward, you must file an election to do so. =============== Careful: As part of the loss may have been generated by sales, such would be a capital loss, not an NOL. Capital losses don't carry back.

Reply to
D. Stussy

Wouldn't capital loss carryovers be reported on line 11B and 11C?

Reply to
removeps-groups

Wouldn't capital loss carryovers be reported on line 11B and 11C? =============== I don't care what line they're reported on. I care about what they actually are.

Reply to
D. Stussy

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.