My adjusted gross income for the year 2021 was $294K. I opened a traditional IRA account in March 2022 and contributed $12K after tax money in the same month ($6K for the year 2021 & $6K for the year 2022). After losing $11980.40, I closed Roth IRA account and withdrew $19.60. Traditional IRA account is still open.
I received two 1099-R statements for the year 2022 with below distribution codes:
1. Code: 2, gross distribution: $12000, Taxable amount not determined is checked, IRA/SEP/SIMPLE is checked
2. Code J, gross distribution: $19.60, Taxable amount not determined is checked, IRA/SEP/SIMPLE is unchecked
While filling returns, turbox tax treats 12020 (12000 + 19.60 rounded) as income and bumped up tax dues.
Q1: Is this really treated as income (I believe, it should be treated as a loss)?
Q2: How can I deduct this as capital loss?
