Capital loss carryovers of the decedent terminate on the date of death. They may not be used by the decedents estate or any trust in existence after the date of death. Any capital losses incurred by the estate on any deductions in excess of the estate's income on its final return may be apportioned to the estate beneficiaries and used by them on their individual returns.
If there is a surviving spouse then he/she may continue to use their share (i.e. 50%) of the joint capital loss carryovers.
Form 8855 is used to make an election to treat a decedent's estate and a trust as one entity for income tax purposes for taxable activity incurred AFTER the decedents date of death. It cannot be used as a means to transfer capital loss carryovers to another taxable entity. Sorry, but thats how the tax law works currently.
I do recommend you engage a CPA or tax attorney to review the decedents estate to make sure an estate income tax return is not required.
Because it is impossible for me to identify and consider ALL the relevant facts, this advice is not intended or written to be used for the purpose of avoiding penalties, and cannot be used for that purpose.
It will not be the first time the IRS gave an incorrect answer.
The key IRS guidence on this is Revenue Ruling 74-175 at http://www.taxlinks.com/rulings/1974/revrul74-175.htm.
It is well-settled law that capital loss carryforwards expire on the death of a decedent.