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Loss on portion of IRA

On 12/12/2022, I split away a portion ($250,000) of my long time IRA.  I cashed out my IRA 11/13/2023, and received $147.155.32, a loss of $102,844.68.  My question is, since I had a basis of 250k, can I write this off as a short term loss?  Can I get any special treatment out of this situation at all?

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6 Replies

Loss on portion of IRA

No.  What did you do on 12/12/22?  Did you move 250,000 to another IRA?  Did you pay tax on it in your tax return?  Why do you have a basis in the 250,000?

 

You will just have less income to pay tax on now.  If you had a basis in the IRA you should have a form 8606 in your return.   I'll page @dmertz for more help.  

dmertz
Level 15

Loss on portion of IRA

I have the same questions as VolvoGirl.  Having $250k of basis in nondeductible traditional IRA contributions seems a bit implausible, but not impossible.

 

All of your traditional IRAs are treated as one large IRA for tax purposes, so splitting a traditional IRA into two traditional IRAs has no effect on how your traditional IRA distributions are taxed.

 

Also, make sure that you are not confusing IRAs with employer-provided retirement accounts like 401(k)s.  (Many people fail to recognize the difference.)

Loss on portion of IRA

Oh we didn't ask what is the code in box 7 on the 1099R?  That may help us know more details.  

dmertz
Level 15

Loss on portion of IRA

And is the IRA/SEP/SIMPLE box marked?

Loss on portion of IRA

Yes, the dist. code is 7, and the IRA/SEP/Simple box IS checked.  And to one of your earlier questions, I simply transferred 250k to an IRA dealing in precious metals.  That's the one that lost money.  I withdrew all of my IRA on or about 11/13/2023.  From all I've read here, I'm guessing I can't take a loss on that portion of the IRA.

Loss on portion of IRA

If you got a deduction when you made the original contributions,  As Dmertz said on another post.......

Losses in a traditional IRA mean that you simply have less that will be taxable in the future.  Taking a deduction for the loss of this pre-tax money would be double-dipping.

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