1041-US: Carryovers and unused deductions on a final return (FAQ)

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Question

What happens to carryovers and unused deductions on a final return?

Answer

When an estate or trust terminates, the following items are available to pass through to beneficiaries.

  • Short-term capital loss carryover
  • Long-term capital loss carryover
  • Net operating losses
  • Excess deductions (subject to 2% AGI limit)

When an estate or trust terminates, the following items expire.

  • Foreign tax credit (Form 1116)
  • Business tax credits
  • Passive activity losses
  • Minimum tax credit (Form 8801)
  • Charitable contributions
  • Investment interest carryover (Form 4952)
  • Section 1231 loss carryover

Related topic: 1041-US: Final return of Form 1041 FAQs

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