New trust client receives a K-1 from a separate trust with Final year deductions

[mattgutz]

So we have found a spot for everything that the trust received through a K-1 of another trust.  All except for the items in Box 11 B&C (Final year deductions for short and long term loss carryovers).  My research skills have been exhausted and I need help!

When I put these items in the passive loss carryover section of the Passthrough K-1 screen they are not included in the Accounting Income on Schedule B of the 1041.  If I include them on the Schedule D, they come through in Accounting Income.

Does anyone know the answer?  The software is usually correct, but I believe these Final Year Deductions should be included in Accounting Income.

[sjrcpa]

Capital losses and gains are corpus.

[mattgutz]

Thanks sjrcpa

I must be missing something.  The capital gains/losses that I input from a 1099-B are being reported as Accounting Income and the Final year deductions for passive loss carryovers are not.

[Barky]

mattgutz, hi, I saw your question and thought I would comment as I have read a lot on NOL and Capital Loss carry forwards in the Final Year. The instructions for the K-1 entries are specific to where they go on a form 1040. Individual Beneficiaries.  Since Trusts are treated as a Separate Entity I'm not sure you can take the loss on another Trust return.  I think it will require a little more research regarding Abusive Trusts and maybe Related taxpayer issues? Good luck with that one!