IRA loss deduction

[JosephJ]

I read I can deduct a loss in a traditional IRA the difference between my basis and the loss. I understand I would have to liquidate all IRA's and Roth's and must be greater than 2% of my AGI. Is the limit of what can be deducted 3% of AGI? I have a $100,000 loss in a traditional IRA and the basis is $14.68.

[dmertz · Accepted solution]

You would have to liquidate only all of your traditional IRAs, not your Roth IRAs, to be able to report on Schedule A the unrecoverable basis in your traditional IRA.  But to be able to get this deduction by liquidating all of your traditional IRAs, your distributions of all of your traditional IRAs to do so would have to have to total less than $15.  Your deduction would be, at most, $15, the amount of your basis (rounded to the nearest dollar).  The rest of your loss will simply be money on which you never had to pay taxes.

[JosephJ]

Correction my basis was actually $95,941.16. The value after the loss was $14.68. Can I deduct the entire los? Difference between basis and the value? Thank you.

[dmertz]

Your unrecoverable basis would be $95,941.16 - $14.68  reported on Schedule A line 23 and included in the total on line 24.  From that would be subtracted 2% of your AGI to obtain your deduction on line 27.