Inherited IRA

Submitted by Bobbi McGee on Fri, 2013-03-22 21:23

My mother died 5 years ago and left me as the sole beneficiary of a rollover IRA. This IRA contained $50,000 in land that was invested through an LLC. Since it wasn’t liquid I couldn’t take any distributions. Just before the 5 year anniversary of her death the land was foreclosed on. The CPA for the LLC just sent my 2 siblings and I K-1’s for 1/3rd of the loss each. My questions:

1. Can a loss on an inherited IRA be claimed by the beneficiary?

2. Can the amount just be split between my siblings and I when there was only one beneficiary? I’m worried they could get into trouble for filing a loss they are not entitled to.

Thanks in advance for your help!



Submitted by Alan - IRA critic on Fri, 2013-03-22 22:27

  • I don’t know why you would get a K1 for an IRA investment unless there was UBTI of 1,000 or more. The only basis in an IRA is from non deductible contributions made by your mother and reported on Form 8606 by her. You would then inherit any remaining basis and if the IRA is fully distributed for less than the amount of remaining basis, a misc itemized deduction is possible subject to the 2% of AGI floor. You should look into the possibility of basis here. If there was no basis then there is no possibility of claiming a loss. Any amount you distribute and gift to your siblings is subject to the annual gift exclusion of 14k. If you gift more than that, you have to file a 709.
  • If your mother passed after her required beginning date, the 5 year rule does not apply and you may owe an excess accumulation penalty for not taking any RMDs. If she passed in 2008, your first RMD year would be 2010 because 2009 RMDs were waived by Congress. But that still leaves a penalty for 2010-2012.


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