Is A NTQ Realized Loss Offsett By IRA Conversion?
Have a client who sold stocks at a $100k long term loss.
He has an IRA account of similar value.
Can he now convert the IRA to a Roth and have the taxable distribution offset the loss?
Have a client who sold stocks at a $100k long term loss.
He has an IRA account of similar value.
Can he now convert the IRA to a Roth and have the taxable distribution offset the loss?
Permalink Submitted by Alan Spross on Mon, 2008-12-22 19:01
No.
The Roth conversion is taxed as ordinary income. LT losses first offset other cap gains, but can only be used to offset 3,000 of ordinary income with the rest carried forward.
If client was limited to only these two transactions, he would have a net 97,000 taxable conversion less any allocated basis in the TIRA from non deductible contributions and of course less personal exemptions and standard or itemized deductions.