Cal. Code Regs. tit. 18 § 13988.4
A deduction is allowable for losses suffered when the net proceeds realized from the sale of decedent's property is less than the appraised value of the property provided the sale was directed by the decedent's will, the sale was necessary in order to raise funds to pay taxes, debts, or costs of administration, or the property was taken in a condemnation proceeding.
The amount of the deduction is the difference between the appraised value of the property and the net amount realized on the sale. In determining the net amount realized, the expenses of sale, such as escrow charges, real estate agent's commissions, attorney's fees, and costs of proceedings, are deducted from the sale price.
If the net amount realized is greater than the appraised value, no deduction of any kind relating to the sale is allowable. In such a situation the costs of sale are not deductible.
NOTE: Reference: Section 13988, Revenue and Taxation Code.
Cal. Code Regs. Tit. 18, § 13988.4