[Code of Federal Regulations]
[Title 26, Volume 8]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.642(h)-4]

[Page 50]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1--INCOME TAXES--Table of Contents
 
Sec. 1.642(h)-4  Allocation.

    The carryovers and excess deductions to which section 642(h) applies 
are allocated among the beneficiaries succeeding to the property of an 
estate or trust (see Sec. 1.642(h)-3) proportionately according to the 
share of each in the burden of the loss or deductions. A person who 
qualified as a beneficiary succeeding to the property of an estate or 
trust with respect to one amount and does not qualify with respect to 
another amount is a beneficiary succeeding to the property of the estate 
or trust as to the amount with respect to which he qualifies. The 
application of this section may be illustrated by the following example:

    Example. A decedent's will leaves $100,000 to A, and the residue of 
his estate equally to B and C. His estate is sufficient to pay only 
$90,000 to A, and nothing to B and C. There is an excess of deductions 
over gross income for the last taxable year of the estate or trust of 
$5,000, and a capital loss carryover of $15,000, to both of which 
section 642(h) applies. A is a beneficiary succeeding to the property of 
the estate to the extent of $10,000, and since the total of the excess 
of deductions and the loss carryover is $20,000, A is entitled to the 
benefit of one half of each item, and the remaining half is divided 
equally between B and C.