Investments within an IRA do not have a capital cost basis. The entire balance in the IRA is tax-deferred income and is entirely taxable when distributed unless the participant had basis in nondeductible traditional IRA contributions (which has nothing to do with the purchase price of any of the investments within the IRA). If the decedent had basis in nondeductible traditional IRA contributions, the basis would generally have been reported on Forms 8606 filed by the participant. Absent such evidence, the entire distribution is taxable.
