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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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.
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.)
Oh we didn't ask what is the code in box 7 on the 1099R? That may help us know more details.
And is the IRA/SEP/SIMPLE box marked?
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.
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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