Question

Why does Estate capital loss appear, but then gets added back in?

Forum|Forum|3 years ago
May 22, 2023
2 replies
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Hi, I don't understand this and it may not matter, but why, on our 1041 (Final Estate Income Tax Return), is our interest and dividend income reduced on Line 4 by $3,000 from our loss on the sale of the inherited house, and also reduced on Line 21 by the $600 exemption (so $3,600), but then in Schedule B on Line 6, the $3,000 capital loss is added back in?

It may not matter since all of the capital loss does appear on the K-1s of the beneficiaries (meaning it was not reduced by $3,000), but I don't know why the IRS added the loss and exemption back in on the 1041. Also, where did the $600 exemption go?

Do you know the answers? Thank you!

TurboTax Business Windows

Critter-3

On a final 1041 ALL tax items are passed thru to the beneficiaries on the K-1 forms to be reported on their personal tax returns which is why everything gets negated on the form 1041 since it will not be used on the 1041.

A

Anonymous_

Employee

@Critter-3 is correct.

Further, the $600 exemption is not utilized on a final return when all items of income, expense, credits, et al, are passed through to the beneficiaries in K-1s.