Tax reductions on IRA that went Bankrupt
I have an IRA with a Stock that went bankrupt. I lost thousands of dollars. Is there anything that I could do to offset the loses other than the $3,000 deductions. This was over $35,000 in my IRA at one point. Any advice on what I can do legally would be grateful[/list]
Permalink Submitted by Al Fry on Mon, 2007-11-19 20:52
One can declare the loss in an IRA, however ALL of the TIRAs owned would have to be surrendered. The loss is an ordinary loss on Schedule A, subject to the 2% of AGI threshold.
Permalink Submitted by Alan Spross on Mon, 2007-11-19 22:30
In addition, assuming this was a traditional IRA, and there is enough left in the account to eliminate the option of closing all your traditional IRAs, then you can only look at the loss of value as something that you will not be taxed on.
There is also frequent class action litigation against companies whose shares plummet, and if you become part of the class action, any proceeds can be re deposited to your IRA account when and if you receive them. After the legal costs, it probably will not amount to much, if anything.
If the shares were in a taxable account instead of an IRA, then you could take a capital loss against other gains, or ordinary income up to 3,000, and this is probably what you were referring to.