What Happens When a Taxpayer Dies with Passive Losses?
When a taxpayer dies holding a passive activity with suspended passive activity losses (PALs), the losses are not fully deductible. Under IRC §469(g)(2), only the portion of PALs that exceeds the step‑up in basis allowed by §1014 can be claimed on the decedent’s final Form 1040; the rest are permanently disallowed. The estate receives the activity with a stepped‑up basis and generally accrues its own suspended PALs because executors seldom meet material‑participation tests. Upon estate termination, §469(j)(12) adds the estate’s PALs to the beneficiary’s basis, but the losses are not transferred as deductions.
Ask Tom Anything - April 2026
Thomas A. Gorczynski’s April 2026 "Ask Tom Anything" post launches a subscriber‑only tax Q&A series. The tax specialist invites paid readers to submit questions on filing, strategy, or practice management, noting he may not answer every query. The article includes a...
COVID-Era Refund Claims Due July 10, 2026
The U.S. Court of Federal Claims in Kwong v. United States held that the COVID‑19 disaster postponement under §7508A froze the §6532(a) refund‑suit deadline from Jan. 20, 2020 through July 10, 2023. A 2025 amendment, §7508A(f), now treats that frozen period as an extension...
An Overview of the Enhanced Senior Deduction
The OB3 Act added §151(d)(5)(C), creating a senior deduction of up to $6,000 per individual 65 or older (or $12,000 for married couples) for tax years 2025‑2028. The deduction lowers taxable income, does not affect AGI, and can be claimed...