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Author: slojo Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121599  
Subject: NOL on estate income Date: 8/14/2010 3:29 PM
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I'm doing the taxes (fiscal yr 09/10) on an estate in its first year. The decedent died in July 2009, so I'm filing From July 09 through June 10. There is a rental house in the estate which I'm using 1040SE for as in the 1041 instructions. With all the expenses due to repairs, etc, plus other expenses of the estate, the taxable income is a negative number (almost $3000 in the red). The estate hasn't closed, and we should be closing everything next month. There may be some income in August that will probably be less than the loss. Do I need to file any form with the 1041 for 09/10 or do I wait and file the NOL in 10/11? And what form do I use to do that?
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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 110892 of 121599
Subject: Re: NOL on estate income Date: 8/14/2010 9:29 PM
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I'm doing the taxes (fiscal yr 09/10) on an estate in its first year. The decedent died in July 2009, so I'm filing From July 09 through June 10. There is a rental house in the estate which I'm using 1040SE for as in the 1041 instructions. With all the expenses due to repairs, etc, plus other expenses of the estate, the taxable income is a negative number (almost $3000 in the red). The estate hasn't closed, and we should be closing everything next month. There may be some income in August that will probably be less than the loss. Do I need to file any form with the 1041 for 09/10 or do I wait and file the NOL in 10/11? And what form do I use to do that?
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There's nothing special to file with the 1041 for 6/30/10.

You carry the NOL over to your 2010-11 fiscal year, which sounds like it will be a short year. To calculate the NOL correctly, see IRS Pub. 536, which has worksheets and other guidance.
http://www.irs.gov/pub/irs-pdf/p536.pdf

Then if you have negative taxable income in the following final year, you have "Excess Deductions on Termination" which is reportable on the beneficiary(ies) K-1 for the final year, and which they deduct as an itemized deduction.

Bill

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Author: slojo Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 110893 of 121599
Subject: Re: NOL on estate income Date: 8/15/2010 11:10 AM
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Thanks a whole lot. I thought that I only needed to do it with the next filing, but I was not sure.

The weirdest thing I came across in the 1041 instructions was this:

"Do not deduct medical or funeral expenses on Form 1041. Medical expenses of the decedent paid by the estate may be deductible on the decedent’s income tax return for the year incurred. See section 213(c). Funeral expenses are deductible only on Form 706."

Because my Mother had relatively low income other than social security, she had instructed my Brother who had her power of attorney not to file income taxes any more, and he complied, so no medical deductions were needed. (We had no expenses, either that needed to be paid out of the estate.)

And although we paid a fair amount towards the funeral, we won't be filing form 706 because the estate is a small one(Under her state's small estate form limit).

So that means only the rich get to deduct funeral expenses?

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 110894 of 121599
Subject: Re: NOL on estate income Date: 8/15/2010 11:15 AM
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So that means only the rich get to deduct funeral expenses?

Yes.

Phil
Rule Your Retirement Home Fool

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