Question

I have a irrevocable trust can deduct a $10,000 loss against $15,000 of dividends ?

Forum|Forum|4 years ago
December 18, 2021
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TurboTax Online

A

Anonymous_

Employee

What type of loss? Is this a passive loss, capital loss, business loss (which would be unlikely)?

Are you using TurboTax Business to prepare a Form 1041 for the trust?

More details are needed as your question is overly broad.

A

Anonymous_

Employee

Note that if the $10,000 loss is a capital loss, you are distributing all of the ($15,000) dividend income to the beneficiary(ies), and this is not the final year of the trust, then then entire $10,000 loss will be carried forward to the trust's next tax year.

Hal_Al

Employee

Q. Can we deduct a $10,000 loss against $15,000 of dividends ?

A. Simple answer: no.

A capital loss can only be deducted DIRECTLY against capital gains, including capital gains distributions (box 2a on a 1099-DIV).

Only $3000 of Capital losses may be deducted against ordinary income, including dividends (including "qualified" dividends). Any excess (over $3000) is carried forward to the next year. Although qualified dividends are taxed at long term capital gains rates, they can not be deducted directly against capital losses.