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Old 11-16-2017, 05:30 PM
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Final estate 1041 with Cap Loss

Final Estate return 1041 has interest, dividends and a current year net capital loss (not a carryover from prior years) resulting in negative Total Income. (How?) Will these items flow through to K-1? My understanding is that this loss should NOT(?) be included in DNI, but all final year income should be passed to the beneficiaries via K-1. I am confused as to where/how/if I report it on K-1 (box 1, 2a, and 4a as a negative amt?) if I don't include the Cap Loss in DNI ? DO I skip DNI calculation for the final 1041?



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Old 11-17-2017, 07:30 AM
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Final Estate return 1041 has interest, dividends and a current year net capital loss (not a carryover from prior years) resulting in negative Total Income. (How?) Will these items flow through to K-1?= Working on the Estate form 1041 that has a capital loss incurred in its final year, which should result in the capital loss being allocated 100% to the beneficiaries, with none be allocated to the estate, per the schedule on page 2 of sch D.Since this is a final return, in which case the losses will be distributed out to the beneficiaries on Line 11 of their K-1s as final year deductions. The $3kcapital loss still appears on page one of the Form 1041 even in the final year. That loss gets added back to the adjusted total income so the DNI on page 2 of the 1041 includes the correct amount. And, as long as the K-1, box 11, has the amount, then the full amount will flow to the beneficiaries individual returns. You can also view the DNI diagnostic worksheet to see how the income is being distributed to the beneficiaries. it belongs on Line 4. To the extent not used on a final 1041 it passes thru to the beneficiaries on K-1s. This doesn't mean you do not show it on tthe 1041


My understanding is that this loss should NOT(?) be included in DNI, but all final year income should be passed to the beneficiaries via K-1. I am confused as to where/how/if I report it on K-1 (box 1, 2a, and 4a as a negative amt?) if I don't include the Cap Loss in DNI ? DO I skip DNI calculation for the final 1041========> capital losses are normally excluded in figuring DNI unless they enter into the computation of any net capital gain that is distributed or must be distributed during the year.Also any Capital Gains will not automatically be included in DNI. However, Capital Gains can under certain conditions be included in the DNI calculation



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