Per the CARES Act, we reversed our 2020 RMD from the accounts we had taken the full RMD in January 2020. We did this by transferring the market value of the full RMD's (Husband and Wife separate IRA's) from mutual fund shares from the IRA's to our joint taxable brokerage account, no tax withholding (pay quarterlies). When the CARES act passed, we elected to do a like property exchange (moved the exact number of shares we had taken out back into the IRA's) back into the IRA's in July (B4 the 8/31/20 deadline).
The Broker gave us a 1099R that reflects the full RMD's being taken in 2020, with NO reversal. The say they will file a "rollover" form (IRS 5498, ~May 21)later in the year the shows the rollover. I assume the gross will report in Line 4a of the 1040, but I do not know what to use in line 4b to show for the reduction for the rollover. To further complicate it, the market value when I put the funds back in was lower than when I took them out, AND part of the IRA was post tax funds.
1) Is the rollover the value of the funds when I took them out, or the value of the mutual funds when I put them back in. (The actual shares out and in are identical to the .0001 shares, but the market value is considerably different.
2) How do you handle the issues with the 8606 schedules, since I took no post tax funds in 2020? (I would assume this is a common problem with everyone who reversed a IRA that had post tax funds in them, whether you paid back with cash or property?)
3) Finally, I am getting conflicting advice, is the difference between the market value of the removal and the market value of the returned shares taxable, or since it is like property (actually identical property, in one case that actual shares taken out) is the rollover $0 taxable.
What a mess, tax law is way to complicated, I thought we were doing a like property, and our 1099R would show no transactions in 2020. Now I have something that looks like an IRA audit flag. HELP!
