Updated September 29, 2026. Quick answer: Box 11 code C is an unused short-term capital loss carryover and code D is an unused long-term capital loss carryover. When the trust or decedent’s estate ends, the beneficiary who succeeds to the property may deduct them under section 1212, on Schedule D.
Related guides on this topic: Inherited IRA Basis and Form 8606 (2026) and Schedule K-1 (Form 1041) Box 10.
What codes C and D mean
The instructions read here are the 2025 edition of the IRS Instructions for Schedule K-1 (Form 1041) for a Beneficiary Filing Form 1040 or 1040-SR (Catalog Number 11374Z, dated March 13, 2025), the edition served at the IRS standing PDF address when read on September 29, 2026. They are written for the beneficiary; the fiduciary’s own instructions are in the Instructions for Form 1041. The IRS instruction reads: “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.”
| Code | Form label | Report on (form’s code list) |
|---|---|---|
| C | Short-term capital loss carryover | Schedule D, line 5 |
| D | Long-term capital loss carryover | Schedule D, line 12; line 5 of the wksht. for Sch. D, line 18; and line 16 of the wksht. for Sch. D, line 19 |
Code C, short-term
“A short-term capital loss carryover, reported as code C, is reported on Schedule D (Form 1040), line 5.”
Code D, long-term
“A long-term capital loss carryover, reported as code D, is reported, as appropriate, on Schedule D (Form 1040), line 12;” and on two worksheets in the Schedule D instructions: the 28% Rate Gain Worksheet (line 5) and the Unrecaptured Section 1250 Gain Worksheet (line 16). The form’s code list gives the same references in its table above.
Related pages
Net operating loss carryovers at termination are codes E and F on the next page. For your own capital loss planning see the capital loss harvest helper.
Common mistakes
- Assuming a carryover exists in every year. The instruction ties codes C and D to termination of the trust or decedent’s estate.
- Putting a long-term carryover only on line 12. The instructions also name two worksheets.
- Mixing up C and D. C is short-term (Schedule D line 5); D is long-term (line 12).
Related: Schedule K-1 Box 11 Code B: Itemized Excess Deductions, Schedule K-1 Box 11 Codes E and F: NOL Carryover, and the capital loss harvest helper.
Every box and code in one place: the Schedule K-1 (Form 1041) boxes table. What a K-1 from an estate reports overall is on the Schedule K-1 for estates page.
Sources
- IRS, Instructions for Schedule K-1 (Form 1041) for a Beneficiary Filing Form 1040 or 1040-SR (2025): https://www.irs.gov/pub/irs-pdf/i1041sk1.pdf
- IRS, Schedule K-1 (Form 1041) 2025, Beneficiary’s Share of Income, Deductions, Credits, etc., page 2 code list: https://www.irs.gov/pub/irs-pdf/f1041sk1.pdf
Source: the IRS instructions for the beneficiary who receives Schedule K-1 (Form 1041), and the form’s own code list, read at irs.gov on September 29, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the estate’s or trust’s fiduciary or the IRS is the right place to confirm anything consequential.