1099R Taxable Amount not calculated

[salmaas]

I was age 59 and 9 months

I took $50,000 of IRA money and invested it, inside the IRA. The investment went south and I only received $28,516 creating a loss of $21,484. It was invested for over 5 years. I received a 1099R showing $28,516 and with X-Taxable Amount Not Determined.

I believe I should be able to enter this as a Capital Loss but am not sure how or where on my tax return.

Can you give me some guidance?

Sandee

[fanfare]

sorry no deductions on your southerly bound securities in an IRA.

You pay regular income tax on whatever you end up with. That's how IRAs work.

[salmaas]

Thanks for that sad answer. I have a followup question--we spent almost $3600 on attorneys to get back the $28K. I've received a 1099-R showing the amount in boxes 1 and 2 AND 2b has checked 'Taxable amount not determined'. What does box 2b really mean?

[BillM223]

"2b has checked 'Taxable amount not determined'. What does box 2b really mean?"

This means that the IRA custodian doesn't have all the information necessary to know how much of this distribution is taxable. For example, there may have been a possibility that you contributed after-tax dollars (non-deductible) to the IRA in previous years which would have not been taxable when returned to you in the distribution, but the IRA custodian's records are not complete enough to determine this.

As the IRS instructions for form 1099-R say,

"[the IRS custodian] are not required to compute the taxable amount of a traditional, SEP, or SIMPLE IRA nor designate whether any part of a distribution is a return of basis attributable to nondeductible contributions."

For IRAs, the IRS's instructions say to put the same amount in box 2a as was in box 1, and then to check the 2b box 'Taxable amount not determined'. I believe that this is a reminder to you to check the basis (amount of non-deductible contributions in the IRA) for yourself.

[fanfare]

In most cases 2b is checked for IRAs because the custodian can't know if you have other IRAs with a basis.

If by chance you did have a basis, and you've closed ALL your IRAs. then that basis is tax-free.
when you tell TurboTax you don't track basis, it will be all taxable.

 the 2% misc deduction for attorney fees is no longer available to itemizers.