My husband and I file MFJ and are ages 67 and 69. In 2023, we sold some stock held in a Contributory IRA in my name and received a 1099R from the brokerage firm showing the full amount as Taxable. We have held the stock long-term and there have been a couple of splits. How do we address the basis of the stock when filing taxes for 2023?
You'll need to sign in or create an account to connect with an expert.
IRA distributions are taxable to the extent the contributions to the plan were deductible when you made them. As such, the distributions would be reported on a Form 1099-R as pension income. The cost of the shares you mention would not be deductible when you take distributions, as you deducted the amount you contributed when you invested in the retirement account. Income earned from that date forward is fully taxable. So, you don't get a deduction in 2023 when you took distributions, so there is nothing to report for the cost basis of your stock on your tax return.
I'm a little confused by your answer. It sounds like you are referring to a Roth IRA and it is not. We initially bought the stock in 2008 and for the first time in 2023, sold some of it. It seems that at some point, the cost basis (what we purchased the initial stock for) should be deducted from the original purchase price. FIFO. Can you clarify, please?
Yes, what ThomasM125 was explaining was that when you contributed to your Traditional IRA back in 2008 (used to buy stock) those contributions would have been deductions from income then. Now your IRA distributions shown on a 1099R are taxable.
Yes that's the point and benefit of contributing to a Traditional IRA and one of the disadvantages. When you made the contribution you got a deduction on your tax return that year. If you didn't take the deduction you have a basis in the IRA. Then it grows tax deferred. You don't report interest, dividend or sales in the IRA account each year. Then when you take a distribution it comes out as income all taxable at your regular tax rate. You don't get the capital gain treatment on sales.
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
astral101
Level 2
expat23843
New Member
bimbettocavallo
New Member
TaxTime13
Returning Member
Ice888
New Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.