Traditional IRA - Losses

Forum|Forum|6 years ago
February 21, 2020
3 replies
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I rolled over a 401k from a previous employer into an traditional IRA (non roth). I bought some stocks and sold some stocks. Overall I lost about $1,200. Is there any way to realize those losses on my 2019 taxes. I only had the one IRA (no others of any other kind) and I have liquidated it completely before the end of 2019.

dmertz

Level 15

No, you cannot realize these losses. These losses simply represent an amount on which you would have otherwise had to pay taxes had the losses not occurred. (Actually, I guess in a sense that means that you are realizing the losses. Simply report the distribution by entering the Form 1099-R and include in income what is left.)

NCperson

Level 15

the money within the IRA is all pre-tax money - you have never paid taxes on it. So the IRS is not going to let you take a loss on something that was never taxed in the first place.

Let's say I put $10,000 in an IRA. It's all pre-tax. I invest it and lose it all. Since i never paid tax on the $10,000, the IRS is not going to let me take a tax deduction on something I never paid tax on in the first place!