How do I report capital loss on estate sale of decedent's residence as unallowed (in ProSeries)?

[carol-may]

BACKGROUND INFORMATION

I am preparing a final 1040, a 1041 for a decedent's estate, and a 1041 for a decedent's trust (holding only the personal residence).  This is both the initial and final 1041 for the trust.

The decedent passed on February 2017, and the trustee (also the executor) sold the home in July 2017.  She has not provided a 1099-S.  Based on assessed value in year of death, sales price, and sales cost, there will be a capital loss.

I understand that a loss may not be claimed and passed on to beneficiaries if a beneficiary lived in the property after death. I believe that is the case here, so that the loss should be disallowed. I just can't determine how to report the loss as disallowed in ProSeries.

I have entered (stepped-up) basis, sales price, and sales expense (e.g., commissions, closing costs, etc)  into Schedule D on the trust final 1041.  I used the code "A", Acquired From Decedent, as the trust become irrevocable on the date of death.  The loss is calculated, and flows through to the six beneficiaries. The 8949 is calculated by ProSeries, and shows a code "E" in column (f).

I have seen several archived Q&As that indicate there is an option to choose a personal loss, so that the loss is disallowed and not passed on to beneficiaries, but I have not seen this.  

How do I get ProSeries to recognize that this is an unallowed loss?

Any help would be greatly appreciated.

Thanks!

Carol

[rbynaker · Accepted solution]

The Sch D / 8949 input for 1041s is a bit anemic.  What you want on the 8949 is an adjustment code "L" and the amount of the adjustment equal to the non-deductible loss.

I would try entering the actual basis in I1 and the sale price in I2 "Corrected basis" but then you have to go to the 8949 and override the code B to a code L.  That may break efile or you may be able to force it through with the override.

If that doesn't work, go with IRonMaN's answer. 🙂

Rick

[IRonMaN]

When all else fails, just show the cost equal to the selling price.