Last year, I overcontributed to a Roth IRA, purchased some securities with the overcontribution, realized the issue, & did a "Removal of Excess" with my brokerage prior to the filing deadline. For the "Removal of Excess", I removed the securities (shares of stock). The shares were at a loss.
My question: when I sell those shares (now in a taxable account), do I report the original cost basis from when they were originally bought (at that time, in the Roth IRA)? Meaning that I can realize a taxable loss on next year's tax return?
That seems like the most sensible approach - the only other possibility might be to report the cost basis as the price on on the day they were removed, but that doesn't seem correct.
I did contact my brokerage, and they said the following: "When the shares were originally bought in the Roth IRA, they were “uncovered,” which means the cost basis doesn’t get reported to the IRS. When transferring the shares out of the account, the non-covered status carries forward with them to the new account, so when sold, the brokerage won’t report the cost basis to the IRS." In other words, I'm responsible for putting my own cost basis when filing my taxes. The brokerage was able to transfer the original purchase date & cost basis of the shares, so I can see that original price in my account on their web UI. The basis just won't be reported to the IRS.
So again, I just wanted to confirm that when I sell, I report the original cost basis from the date that it was originally purchased (while inside the Roth IRA), and not the cost basis on the day that they were removed.
