No, and the $1000 is probably taxable income. The whole point of an IRA is that the money is not taxed when you deposit it, and you pay income tax on whatever you withdraw, whether it increases or decreases in value. Since you never paid tax on the initial $10,000 deposit, you have no basis in your investment and the loss is not coming out of your previously taxable income. So there is nothing you can deduct, and the money you did get is going to be taxable income.
