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Capital Loss Carryover & Death

 
 
Ron Sheldon
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      02-09-2006, 05:13 AM
My father passed away in 2005 just before reaching 91 and
I'm now preparing his 2005 income tax returns -- zero tax
liability.

My brother and I inherited his assets held in his brokerage
account, which was registered Transfer on Death and had a
value less than that necessary to require an Estate Tax
return.

When I prepared my father's 2005 income tax return, part of
the Capital Loss Carryover offsets 2005 capital gains
distributions and the $3,000 maximum offset on line 13, Form
1040, but a substantial amount of prior years Capital Loss
Carryover remains unused.

Does this unused Capital Loss Carryover expire this year
with my father's death or do my brother and I inherit the
unused amount for use with our income taxes?

In the unlikely event that my brother and I inherit the
remaining unused Capital loss Carryover, please direct me to
the IRS publication or other source where I can read more
about this.

Thank you,

Ron Sheldon

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Paul Thomas, CPA
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      02-11-2006, 07:26 PM
"Ron Sheldon" <(E-Mail Removed)> wrote

> My father passed away in 2005 just before reaching 91 and
> I'm now preparing his 2005 income tax returns -- zero tax
> liability.
>
> My brother and I inherited his assets held in his brokerage
> account, which was registered Transfer on Death and had a
> value less than that necessary to require an Estate Tax
> return.
>
> When I prepared my father's 2005 income tax return, part of
> the Capital Loss Carryover offsets 2005 capital gains
> distributions and the $3,000 maximum offset on line 13, Form
> 1040, but a substantial amount of prior years Capital Loss
> Carryover remains unused.
>
> Does this unused Capital Loss Carryover expire this year
> with my father's death or do my brother and I inherit the
> unused amount for use with our income taxes?


Capital losses are, unfortunately, a use-it or lose-it deal.
They do not get inherited by you or your brother.

--
Paul Thomas, CPA
(E-Mail Removed)

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<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
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<< Copyright (2006) - All rights reserved. >>
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ebetts3@msn.com
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      02-11-2006, 07:26 PM
Capital loss carry forward ceases on death.

<< ================================================== ===== >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
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Rich Carreiro
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      02-11-2006, 07:45 PM
Ron Sheldon <(E-Mail Removed)> writes:

Sorry for your loss .

> Does this unused Capital Loss Carryover expire this year
> with my father's death or do my brother and I inherit the
> unused amount for use with our income taxes?


A taxpayer's capital loss carryover expires when the
taxpayer does. You can use the carryover on the
decendent's final income tax return, but after
that it goes "poof".

Consider it the flip side of the basis reset on death.

--
Rich Carreiro (E-Mail Removed)

<< ================================================== ===== >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
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cballard@tyyni.net
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      02-11-2006, 07:46 PM
Ron Sheldon wrote:

> When I prepared my father's 2005 income tax return, part of
> the Capital Loss Carryover offsets 2005 capital gains
> distributions and the $3,000 maximum offset on line 13, Form
> 1040, but a substantial amount of prior years Capital Loss
> Carryover remains unused.
>
> Does this unused Capital Loss Carryover expire this year
> with my father's death or do my brother and I inherit the
> unused amount for use with our income taxes?


Unfortunately, capital loss carryovers disappear when
someone dies. Any excess amounts that cannot be used on his
final tax return are lost. See Revenue Ruling 74-175.

--Chris Ballard

<< ================================================== ===== >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ================================================== ===== >>
 
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William Brenner
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      02-14-2006, 06:45 AM
(E-Mail Removed) wrote:

> Capital loss carry forward ceases on death.


Please allow me to put a different twist on this.

A married couple, who file MFJ, have separate securities
portfolios, each in a revocable trust. Their estates are
willed each to the other. One of them, whose portfolio has
a carry forward loss, dies. Does the carry forward cease, or
does it survive due to the MFJ factor?

<< ================================================== ===== >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
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<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
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