Thank you for the very detailed response. In order to ensure I'm understanding this correctly, I'd like to use placeholder numbers to represent your guidance:
In 2021, at age 60, I transferred $10,000 in fiat from a 401k to a traditional crypto IRA that I used to fund 1,000 coins at a value of $10 each. Today, the value of each coin is $8. If I distribute the coins to my personal crypto wallet, I would incur a tax liability for tax year 2022 based on the current $8 value of each coin, even though I have not sold any of the coins for fiat/cash? Additionally, at this coin distribution, my cost basis for each coin would be established at $8 each?
Finally, assuming I sell the coins in 2025 at a value of $11 each my 2nd tax liability would be based on the $3 gain ($11 minus $8)? However, if I end up selling the coins in 2025 at a value of $7 each, my tax loss based on $1 ($8 minus $7) couldn't be used to offset unrelated capital gains?
This is what I expected except for the inability to offset any potential future losses to unrelated capital gains. Uncle Sam always has a zinger buried in the tax laws.
