K-1 with Estate Beneficiary Loss on sale

["\"Re...@home.com]

In 2007 the our mother of 4 boys died. Estate to be 25% each. Brother A
was executor of estate, I'm Brother B. Part of estate was an empty lot
he kept in the estate until late 2020. In early 2021 I got a K-1 showing
a $12273 loss (in Part III Box 11 with Code D) on sale to be filed with
my TY 2021 1040.

After some study of this, it appears to me that the attorney who
prepared the 4 K-1s for each brother did NOT divide the loss by 4 for
each of us.  Here are the numbers I've been given:

75000 = 2007 basis
65500 = 2020 gross sales price
60000 = net at closing
-12273 = my K-1 loss

So a "rough" loss appears to be 75K-60K = 15K
but 4 x 12273 is 49092, not even close to 15K

Assuming the attorney sent the IRS a Form1041 showing  one 12273 loss,
if the 4 of us claim the same on our 1040s, the IRS may want an explanation.

I am assuming also that neither he nor the executor intended for only me
to benefit from 100% of the loss ;-)
I do see where he charged for preparing 4 K-1s.
I do not have a copy of his Form 1041.

I am in contact with the executor, but he is slow in responding.

Any  comments are most welcome before we call the attorney.
..

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[Taxed and Spent]

On 1/10/2022 5:47 PM, "\"Retired"@home.com wrote:
> In 2007 the our mother of 4 boys died. Estate to be 25% each. Brother A
> was executor of estate, I'm Brother B. Part of estate was an empty lot
> he kept in the estate until late 2020. In early 2021 I got a K-1 showing
> a $12273 loss (in Part III Box 11 with Code D) on sale to be filed with
> my TY 2021 1040.
>
> After some study of this, it appears to me that the attorney who
> prepared the 4 K-1s for each brother did NOT divide the loss by 4 for
> each of us.  Here are the numbers I've been given:
>
> 75000 = 2007 basis
> 65500 = 2020 gross sales price
> 60000 = net at closing
> -12273 = my K-1 loss
>
> So a "rough" loss appears to be 75K-60K = 15K
> but 4 x 12273 is 49092, not even close to 15K
>
> Assuming the attorney sent the IRS a Form1041 showing  one 12273 loss,
> if the 4 of us claim the same on our 1040s, the IRS may want an explanation.
>
> I am assuming also that neither he nor the executor intended for only me
> to benefit from 100% of the loss ;-)
> I do see where he charged for preparing 4 K-1s.
> I do not have a copy of his Form 1041.
>
> I am in contact with the executor, but he is slow in responding.
>
> Any  comments are most welcome before we call the attorney.
> ..
>

How were you given those numbers, particularly the 2007 basis? Was that
a stepped up basis at time of death, or an original purchase price?

["\"Re...@home.com]

It is stepped up basis per  Brother A, the executor of the estate

There is a call into the attorney to get his clarification.

["\"Re...@home.com]

OK, here is response from attorney. The verbal basis I was told was way
off :-0

"The total loss on the sale of the property was $49,091. This loss
amount was split between the four brothers. The per brother loss split
was $12,273 each. The IRS reports the loss as a "D" code, not as
negative.  The basis of $ 110,000 was established per an appraisal at
the time of the mother's passing. The closing costs from the sale are
added to the basis for a total of $114,591. The property sold for
$65,500 on 12/10/2020."

So looks like I'm OK to use the 12K loss, which is limited to 3K per
year, then a carryover to next year(s).
But now I'm wishing it would have been sold back in 2007 !!!  Oh well,
spilled milk and all that.