[Code of Federal Regulations]
[Title 26, Volume 8]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.642(h)-4]

[Page 50-51]
 
                       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

[[Page 51]]

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.