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MequonCPA
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2324
Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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My Client had a Grantor Trust set up in 1991. All income and

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My Client had a Grantor Trust set up in 1991. All income and Capital Transactions were reported directly on her annual 1040. No 1041's were ever filed because the Grantor Trust's ID# XXXXX her SS#. Over recent years, she accumulated a $90,000 LT Capital Loss Carryforward. She died in April 2009. Her Trust applied for a new ID#. Out of the Trust, all of her securities were sold at a significant loss utilizing original cost basis. My questions are as follows:

1. Is her personal LT Capital Loss Carryforward lost forever?
2. Do the beneficiaries of her Trust receive either or none or both of the LT Capital Loss Carryforwards from her Personal Return and Final 1041?
3. Since the Securities never left the Trust, can I use the original cost basis for the final 1041, or do I have to use the Date of Death Values?

Hopefully, you get the gist of my questions. Thank you very much for any assistance.

Jim Landsberg
Submitted: 4 years ago.
Category: Tax
Expert:  MequonCPA replied 4 years ago.

Dear XXXXX-

 

The individual's loss carryovers died when she did. As it was initially a grantor trust, the basis of the assets are stepped up/down to current fair market value at date of death. Should the trust have capital loss carryovers at termination, the loss carryover is passed out to the residuary beneficiaries on the final trust return.

MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2324
Experience: CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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