That was confusing me at first as well, but see research below.

"An excess business loss is the excess of your aggregate business deductions for the tax year over the sum of:

• Your aggregate business income and gains for the tax year, and
• $250,000 or $500,000 if you are a married joint-filer.

The excess business loss is carried over to the following tax year and can be deducted under the rules for net operating loss (NOL) carryforwards. "

The initial estate return had a $212K sch E loss and a $73K loss on sale of rentals equaling a $285 NOL.