Just checking, capital loss carryforward

[joanmcq]

I'm doing the 2021 return of a woman that died in January. Her husband died in 2020.  they lived in CA (community property state).  There's a $100k capital loss c/f on the 2020 return.  Am I correct in assuming that my taxpayer gets 1/2 the carryforward?

[jklcpa]

Capital loss carryforwards of a decedent die with the decedent and must be utilized on his or her final 1040, and that would have been 2020 for the husband's losses.  The surviving spouse of a married couple filing a joint return in the year of spouse's death may utilize the loss c/f because that is the deceased spouse's final 1040, but then it is lost.  Rev Rul 74-175

In your client's case, the only way the woman would get 1/2 of the carryforward is if the property that was sold that generated that loss had been jointly held property at the time of its disposition.

For tracing the prior years' losses between H & W when separate and joint returns may be involved, there are specific rules with examples in reg sec 1.1212-1(c). 

[joanmcq]

Ah, more inquiries show that as husband died in January 2020, the losses were after he died.  They're hers!