Is it possible/legal to have a stock which is under water moved outside the IRA as a redemption and sell it to claim a loss?
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Is it possible/legal to have a stock which is under water moved outside the IRA as a redemption and sell it to claim a loss?
On Wed, 9 Feb 2022 11:40:21 EST, D L wrote:
Is it possible/legal to have a stock which is under water moved outside the IRA as a redemption and sell it to claim a loss?No. _Any_ distribution from an IRA is ordinary income and tax is owed
on it. (If some contributions to an IRA were after-tax money, then a corresponding proportion of any distributions is non-taxable.)
As a practical matter, I doubt very much that your IRA custodian
would "move the stock outside the IRA". Rather, the custodian (or
you) would sell the stock, replacing those shares held in the IRA
with equivalent money in the IRA. But even if you could transfer the
stock as shares from your IRA to another account, it would still be a distribution of the stock, and you'd owe tax on the market value as
of the day of the transfer.
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Stan Brown, Tehachapi, California, USA https://BrownMath.com/
Shikata ga nai...
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Distributions "in-kind" are done all the time. Every broker can do
it.
ira smilovitz <ira.sm...@gmail.com> wrote:
Distributions "in-kind" are done all the time. Every broker can doWhy isn't the basis zero on those? Or is the market value taxable so
it.
its basis is market value for that reason?
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Stu
http://DownToEarthLawyer.com
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On Wed, 9 Feb 2022 11:40:21 EST, D L wrote:
Is it possible/legal to have a stock which is under water moved outside the IRA as a redemption and sell it to claim a loss?
No. _Any_ distribution from an IRA is ordinary income and tax is owed
on it. (If some contributions to an IRA were after-tax money, then a corresponding proportion of any distributions is non-taxable.)
As a practical matter, I doubt very much that your IRA custodian
would "move the stock outside the IRA". Rather, the custodian (or
you) would sell the stock, replacing those shares held in the IRA
with equivalent money in the IRA. But even if you could transfer the
stock as shares from your IRA to another account, it would still be a distribution of the stock, and you'd owe tax on the market value as
of the day of the transfer.
On 2/9/2022 4:33 PM, Stan Brown wrote:It is not a Roth IRA. The idea is to move it out assuming the cost basis will remain the same since it is under water and sell it to take a loss.
On Wed, 9 Feb 2022 11:40:21 EST, D L wrote:
Is it possible/legal to have a stock which is under water moved outside the IRA as a redemption and sell it to claim a loss?
No. _Any_ distribution from an IRA is ordinary income and tax is owed
on it. (If some contributions to an IRA were after-tax money, then a corresponding proportion of any distributions is non-taxable.)
As a practical matter, I doubt very much that your IRA custodian
would "move the stock outside the IRA". Rather, the custodian (or
you) would sell the stock, replacing those shares held in the IRA
with equivalent money in the IRA. But even if you could transfer the
stock as shares from your IRA to another account, it would still be a distribution of the stock, and you'd owe tax on the market value as
of the day of the transfer.
Are you considering that it might be a Roth IRA and some of that money is yours and can be withdrawn without penalty? Maybe the stock issue makes a difference.
It is not a Roth IRA. The idea is to move it out assuming the cost basis will remain the same since it is under water and sell it to take a loss.
According to D L <debbie.l...@gmail.com>:
It is not a Roth IRA. The idea is to move it out assuming the cost basis will remain the same since it is under water and sell it to take a loss.If it's a regular IRA, in the usual situation that all of the
contributions were deductible, the cost basis for everything in the
IRA is zero. So no, you can't do that. Everything you withdraw is
treated as current income, not capital gains.
If some of the contributions were non-deductible, the non-taxable part of a distribution
depends on the ratio of the deductible and non-deductible contributions. See pub 590-B:
https://www.irs.gov/publications/p590b#en_US_2020_publink1000230818
I suppose there might be situations where it would make sense to take
an IRA distribution in kind if you wanted to continue to hold the
asset, but in a world of zero brokerage commissions, the benefit compared
to selling in the IRA and then repurchasing outside it is hard to see.
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Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly
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