If there was a loss in value of the overall IRA account while the $7,000 was in the account, a proper return of the $7,000 return of contribution would have resulted in a distribution of less than $7,000. If $7,000 was distributed, it seems that you requested a regular distribution, not a return of contribution, in which case you may have no changes to your 2021 tax return and a $7,000 distribution that is reportable on your 2022 tax return that may be substantially taxable (if you have other money still in your traditional IRAs) and, if you are under age 59½, subject to an early-distribution penalty. A regular distribution be indicated on the Form 1099-R with code 1 or code 7 depending on your age.
For example, if the IRA lost 10% in the interim, a proper return of the $7,000 contribution would have resulted in a distribution of $6,300, normally calculated by the IRA custodian when asked to make an explicit return of contribution.
The lost value is not reportable.
