Have a Tax Question? Ask a Tax Expert
Capital loss is passed to beneficiaries on final K1.
But - it is subject to $3000 limit on the form 1040.
That is correct - all unused capital losses are reported on line 11 - and there is NO limit here.
That amount is transferred to schedule D (1040) , line 12 - as long term.
But - that deduction is limited by $3000 per year - unused capital gains are carried over to the following year.
Legal costs specifically related to the sale of the property are added to the basis.
However - if these are legal fees related to the estate - not to that property - they are reported on K1 under code A - and transferred to Schedule A (1040), line 23