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Posted by John Beurket on August 7, 2008, 12:38 pm
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When the residence of the decedent is sold by an estate for less than
the appraised value at the time of death, can a capital loss be claimed?
John Beurket
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Posted by Mark Bole on August 7, 2008, 2:13 pm
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John Beurket wrote:
> When the residence of the decedent is sold by an estate for less than
> the appraised value at the time of death, can a capital loss be claimed?
If the residence was first converted to an income-producing use, such as
a rental, yes.
If a beneficiary lived in the residence, then no.
Otherwise, definitely maybe. The IRS position is no, but there have
been some court cases on this where it was successfully argued that the
estate gets a stepped-up basis on the property and the expense of sale
then becomes a deductible loss, typically passed through to the
beneficiaries.
In your case, it sounds like you are talking about an actual decrease in
market value rather than just expense of sale, but the result should be
the same.
-Mark Bole
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
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<< to this newsgroup as well as our anti-spamming policy >>
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Posted by Bill Brown on August 7, 2008, 11:13 pm
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> John Beurket wrote:
> > When the residence of the decedent is sold by an estate for less than
> > the appraised value at the time of death, can a capital loss be claimed?
>
> If the residence was first converted to an income-producing use, such as
> a rental, yes.
>
> If a beneficiary lived in the residence, then no.
>
The residence does NOT have to be converted to anything but investment
property for the capital loss to be deductible.
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2007) - All rights reserved. >>
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Posted by Alan on August 8, 2008, 12:46 am
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Bill Brown wrote:
>> John Beurket wrote:
>>> When the residence of the decedent is sold by an estate for less than
>>> the appraised value at the time of death, can a capital loss be claimed?
>> If the residence was first converted to an income-producing use, such as
>> a rental, yes.
>>
>> If a beneficiary lived in the residence, then no.
>>
> The residence does NOT have to be converted to anything but investment
> property for the capital loss to be deductible.
>
Deductible by the estate up to a maximum loss of $3000 against
the estate's taxable income. A net capital loss stays with the
entity until its final year. Only then can any remaining capital
loss be passed through to the beneficiaries.
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Stuart Bronstein on August 8, 2008, 1:16 am
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> Bill Brown wrote:
>>>
>> The residence does NOT have to be converted to anything but
>> investment property for the capital loss to be deductible.
>>
> Deductible by the estate up to a maximum loss of $3000 against
> the estate's taxable income. A net capital loss stays with the
> entity until its final year. Only then can any remaining capital
> loss be passed through to the beneficiaries.
The estate can pass on capital gains to the heirs - why not capital
losses?
Stu
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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