I have a schedule K-1 with only Final year deductions (box 11) totaling about $20000.00. My total income was about $30,000. How will this effect my tax return?

[yogi819]

 Am I correct that I can use these deductions to lower my taxable income and increase my return? Info I've found in researching seem to indicate this.

Thanks

[ScruffyCurmudgeon]

IN RESPONSE TO THE EFFECT OF A BENEFICIARY RECEIVING ON SCHEDULE K-1(1041) A LINE 11 CODE C

In the final year of a Trust or Estate, but not before then, the Form 1041 filing creates Schedules K-1 that pass through in Section 11 any deductions that were available to the Trust or Estate but in its final year are passed through to the Beneficiaries for their personal use on their own Form 1041.

Example:  Long-Term Capital Loss might be a carry-forward within the Estate/Trust or might have been realized in the final year.  The K-1 reports this in Section 11 and the Beneficiary can apply that Capital Loss to his/her own gains and losses, and to a limitation of $3,000 annually apply it against the ordinary income such as interest or wages.

See image below for the codes that may have been used.
Provide detail on what type of Section 11 data is reported and if needed an explanation can be provided.

[yogi819]

13000.00 is Excess Deductions (A.), and 6500.00 is Long term capital loss carry over (C.)

[ScruffyCurmudgeon]

In reply to your note that the Box 11 Final Year Deductions and Credits were 
"13000.00 is Excess Deductions (A.), and 6500.00 is Long term capital loss carry over (C.)"

When you are in the TurboTax interview, in Personal - Personal Income Section - Your 2016 Income Summary
SCROLL down to the section labelled: Business Investment and Estate/Trust Income and click start for Schedule K-1.

Follow the questions as appropriate and check off Box 11 - and then make the entries from the Schedule K-1 that you received.

This is the Tax procedure for your entries:
Box 11, Code A—Excess Deductions on Termination

If this is the final return of the estate or trust, and there are excess deductions on termination, you may deduct the beneficiary’s share of the excess deductions on line 23 of Schedule A (Form 1040) as a miscellaneous itemized deduction subject to the 2% floor.

Excess deductions on termination occur only during the last tax year of the trust or decedent’s estate when the total deductions (excluding the charitable deduction and exemption) are greater than the gross income during that tax year. Only the beneficiary of an estate or trust that succeeds to its property is allowed to deduct that entity’s excess deductions on termination. A beneficiary who doesn’t have enough income in that year to absorb the entire deduction can’t carry the balance over to any succeeding year.

Box 11, Code C—Unused Capital Loss Carryover
Upon termination of the trust or decedent’s estate, the beneficiary succeeding to the property is allowed to deduct any unused capital loss carryover under section 1212.

A long-term capital loss carryover, reported as code C, is reported, as appropriate, on Schedule D (Form 1040), line 12; line 5 of the 28% Rate Gain Worksheet for Schedule D, line 18; and line 16 of the Unrecaptured Section 1250 Gain Worksheet for Schedule D, line 19.