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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29777
Experience:  Taxes, Immigration, Labor Relations
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Am I subject to a 3,000 capita loss on a personal return

Customer Question

am I subject to a 3,000 capita loss on a personal return when its a final 1041
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

Capital loss is passed to beneficiaries on final K1.

But - it is subject to $3000 limit on the form 1040.

Customer: replied 1 year ago.
I prepared the 1041 , there was a 1099-s for the sale of the house. The stepped up basis vs sales price yields no capital gain.
the selling and legal costs were 45k. I have that showing on 11b of the k1, which is only allowing the 3k capital loss to reduce income. can I deduct any legal fees on schedule A. or is the taxpayer still allowed to carryover the 3k each year
Expert:  Lev replied 1 year ago.

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.

Expert:  Lev replied 1 year ago.

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