Form 1041 Again

[Christian]

I am now preparing (grappling is a better word)  with the Form 1041 I referred to in an earlier post. The estate sustained a loss of some 18,000 dollars on the sale of the house and land. My expectation was to pass half of the loss to each of the two heirs and they would use it up 3,000 per year. You can imagine my utter surprise to find I can pass on only 3,000 dollars per year and must parcel it out over some five additional years form the estate which is being closed as we speak ? Clearly I must be reading this wrong ? Any input is most appreciated. 

[Lynn EA USTCP in Louisiana]

Is the 1041marked final? I am not an expert in 1041s but it is my understanding that all losses flow to the beneficiaries in the final year. 

[Christian]

Yes Lynn this is the initial filing AND the final filing as their was no need to file a 1041 until 2018 as the estate income was less than 600 dollars per year. The heirs were having to wait until their mother's home was sold and it took three years to sell. If what you suggest is correct I can distribute the 18,000 loss and the heirs can use it up over time. Maybe I can find the info you have suggested. I rarely do 1041s but can usually do them just fine but this is something I've not encountered.

[Lynn EA USTCP in Louisiana]

The 1041should gave ‘initial’ , ‘final’ boxes to check in the section just below the address on the first page. When prepping the k-1’s they too should have a ‘final’ box to check. 

[Christian]

I thank you for your kindly assistance. I found some material which bore out precisely what you noted. I think I have again muddled through with the help of my friends here on this blog. I plan on contacting the practitioner's help line tomorrow to firm up a few minor points. Again many thanks.

[SaraEA]

Lynn is correct.  When the estate return is marked final, the entire loss flows through to the beneficiaries.  They can use it to offset cap gains on their personal returns and then up to $3k per year until used.  What is lost with the TCJA is their ability to use estate expenses (attorney, probate, notice, tax prep fees etc).  These used to flow through on the K1 and the beneficiaries could add them to their Sch A Misc 2% deductions.  That category is now gone.

[Christian]

I am wondering if in Schedule B I need place any figure or show somehow the loss is distributed. I see no need to show anything as there is no income to distribute.