You don't deduct the basis in an IRA to get to the taxable amount. A distribution from an IRA that has both pre-tax and after tax contributions is a combination of both. For instance, if you had an IRA with $20,000 of after-tax contributions (basis) and $80,000 of pre-tax contributions and gains, then a distribution from the account would be 20% basis and not taxable, and the other 80% would be taxable. The ratio is calculated as of December 31 of the year prior to the distribution. This is calculated on Form 8606.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
