Closing out an estate -final 1041

[JaneP]

Decedent''s only asset left was a secured note/mortgage held on her home by former renter. In 2017 the individual died, her family that lived in it let the proprety go and did not pay the last 2 RE tax bills. Decedent's heirs filed for a quit claim deed and property was  conveyed back to estate. Sold in 2018 at a county tax sale for 20% of original note, paid all costs and ended up with a "book" loss of about $50,000.

Q1-Can they take the loss on the property, netting all legal fees - from the note's value at the time of default? Q2-Is it a capital loss to each heir, maxed  by $,3000 loss limitation? Q3-if the estate is closed out does the loss go tothe hier and they carry it over if they are limited by the $3000 maximium loss?

I am trying to help a family I am related to, but have little estate experience.  Should I just hire someone?

[grandmabee]

final year of estate loss goes to the K-1's and to schedule D.  so they would be limited to 3,000 loss each year.

 

[jklcpa]

4 hours ago, JaneP said:

Q1-Can they take the loss on the property, netting all legal fees - from the note's value at the time of default? Q2-Is it a capital loss to each heir, maxed  by $,3000 loss limitation? Q3-if the estate is closed out does the loss go tothe hier and they carry it over if they are limited by the $3000 maximium loss?

Yes, you are correct that the basis of the property reacquired is the value of the note plus any expenses related to reaquiring the property, as long as the seller didn't receive any other cash or property, or previously write down of value on the note.  Sec 1038(a) through (d) and also (g)

 

[Roberts]

A capital loss will pass through to the beneficiaries and the yearly limit applies. (I assume that's still true)

My issue is how did you value the note at the time of death?