Updated November 6, 2026. Quick answer: The Capital Loss Carryover Worksheet in the Schedule D (Form 1041) instructions figures how much capital loss an estate or trust carries from 2025 to 2026. It has 14 lines, split into a short-term part (lines 1 to 9) and a long-term part (lines 10 to 14). Use it if Schedule D line 20 is a loss and either the line 19 column (3) loss is more than $3,000 or Form 1041 line 23 is a loss.
When an estate or trust uses it
“Use this worksheet to figure the estate’s or trust’s capital loss carryovers from 2025 to 2026 if Schedule D, line 20, is a loss and (a) the loss on Schedule D, line 19, column (3), is more than $3,000; or (b) Form 1041, page 1, line 23, is a loss.”
The loss limit behind it is in Part IV of the instructions: “If the sum of all capital losses is more than the sum of all capital gains, the capital losses are allowed as a deduction, but only to the extent of the smaller of the net loss or $3,000.”
The 14 lines as the IRS prints them
The worksheet is headed “Keep for Your Records”. The two notes that route you between the short-term and long-term parts are shown in the rows where they are printed.
| Line | As printed in the IRS worksheet |
|---|---|
| 1 | “Enter taxable income or (loss) from Form 1041, line 23” |
| 2 | “Enter the loss from line 20 of Schedule D as a positive amount” |
| 3 | “Enter the amount from Form 1041, line 21” |
| 4 | “Adjusted taxable income. Combine lines 1, 2, and 3. If zero or less, enter -0-” |
| 5 | “Enter the smaller of line 2 or line 4” |
| Note | “If line 7 of Schedule D is a loss, go to line 6; otherwise, enter -0- on line 6 and go to line 10.” |
| 6 | “Enter the loss from Schedule D, line 7, as a positive amount” |
| 7 | “Enter the gain, if any, from Schedule D, line 16. If that line is blank or shows a loss, enter -0-” |
| 8 | “Add lines 5 and 7” |
| 9 | “Short-term capital loss carryover to 2026. Subtract line 8 from line 6. If zero or less, enter -0-. If this is the final return of the estate or trust, also enter on Schedule K-1 (Form 1041), box 11, using code C” |
| Note | “If line 16 of Schedule D is a loss, go to line 10; otherwise, skip lines 10 through 14.” |
| 10 | “Enter the loss from Schedule D, line 16, as a positive amount” |
| 11 | “Enter the gain, if any, from Schedule D, line 7. If that line is blank or shows a loss, enter -0-” |
| 12 | “Subtract line 6 from line 5. If zero or less, enter -0-” |
| 13 | “Add lines 11 and 12” |
| 14 | “Long-term capital loss carryover to 2026. Subtract line 13 from line 10. If zero or less, enter -0-. If this is the final return of the estate or trust, also enter on Schedule K-1 (Form 1041), box 11, using code D” |
What carries forward and for how long
“A capital loss carryover may be carried forward indefinitely.” “Capital losses keep their character as either short-term or long-term when carried over to the following year.” That is why the worksheet ends in two separate results, line 9 for short-term and line 14 for long-term.
In the final year the amounts also go on the beneficiaries’ forms. The instructions for lines 9 and 14 say that on the final return of the estate or trust, the short-term carryover goes on Schedule K-1 (Form 1041), box 11, using code C, and the long-term carryover using code D.
A worked example with assumed amounts
The IRS prints no filled-in example for this worksheet. The case below uses an assumed short-term loss and a smaller long-term gain, so Schedule D line 16 is a gain and the long-term part (lines 10 through 14) is skipped.
| Line | What it holds | Amount |
|---|---|---|
| 1 | Taxable income from Form 1041, line 23 (assumed, used in the computed rows) | $1,000 |
| 2 | Loss from Schedule D, line 20, as a positive amount (assumed, used in the computed rows) | $3,000 |
| 3 | Form 1041, line 21 (assumed, used in the computed rows) | $100 |
| 4 | Lines 1, 2 and 3 combined (computed) | $4,100 |
| 5 | Smaller of line 2 or line 4 (computed) | $3,000 |
| 6 | Short-term loss from Schedule D, line 7, as a positive amount (assumed, used in the computed rows) | $5,000 |
| 7 | Gain from Schedule D, line 16 (assumed, used in the computed rows) | $1,200 |
| 8 | Line 5 plus line 7 (computed) | $4,200 |
| 9 | Short-term capital loss carryover to 2026: line 6 minus line 8 (computed) | $800 |
Line 4 is $1,000 plus $3,000 plus $100, which is $4,100 (computed), and line 5 takes the smaller of $3,000 and $4,100, which is $3,000 (computed). Line 8 is $3,000 plus $1,200, which is $4,200 (computed). Line 9 is $5,000 minus $4,200, which is $800 (computed). As a cross-check, the net loss is $5,000 minus $1,200, which is $3,800 (computed); after the $3,000 deduction, $800 remains (computed).
Which edition this page reads
This page reads the 2025 Instructions for Schedule D (Form 1041), the file irs.gov served on November 5, 2026 (sha256 in the kit data). The worksheet is on printed page 11 and refers to carryovers from 2025 to 2026, so read the instructions for the year you are filing.
Common mistakes
- Using the worksheet when Schedule D, line 20, is not a loss. The heading condition requires a loss there.
- Entering the Schedule D line 7 or line 16 loss as a negative number. Lines 6 and 10 take it as a positive amount.
- Skipping the routing notes. If line 7 of Schedule D is not a loss, line 6 is -0-; if line 16 is not a loss, lines 10 through 14 are skipped.
- Letting a result go below zero. Lines 4, 9, 12 and 14 all say to enter -0- if zero or less.
- Forgetting the Schedule K-1 codes C and D on the final return of the estate or trust.
Related: the Form 1040 version of this worksheet, Schedule D lines 21 and 22, and Form 1041 lines 23 to 30.
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Answer againSources
- 2025 Instructions for Schedule D (Form 1041), Capital Gains and Losses: https://www.irs.gov/pub/irs-pdf/i1041sd.pdf
- IRS, About Schedule D (Form 1041), Capital Gains and Losses: https://www.irs.gov/forms-pubs/about-schedule-d-form-1041
Read from the IRS documents linked above on November 6, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.