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posted Mar 18, 2025 8:08:56 PM

1099-R Distribution to be used as startup cost for setting up a Farm Business

I am 64 years old. In November of last year I took a large sum of money out of my IRA's to start a farm business.  Is there anyway to reduce the tax burden incurred by withdrawing money from my IRA and using it as income into a new farm business I am starting? 

I noticed that if I treat the distribution as income for the business my tax burden is decreased significantly, but being that the distribution are 1099-R (Box 7 - Code 7 - Normal Distribution) I do not get the deduction.

Any insight would be appreciated.

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1 Replies
Expert Alumni
Mar 18, 2025 8:15:00 PM

No, there is nothing you can do to reduce the taxation of the distribution from your IRA.  As you mentioned, there is a way to invest IRA funds in a business.  It's not a simple process and very specific steps must be taken, but it can't be done after the fact.  You're stuck paying the tax on your IRA withdrawal.