Stock rollover value to IRA as approved by Cares Act
Stock rolled over to IRA account has lower value than at time of withdrawal. Same shares rolled over. What does the brokerage firm show as the distribution value? If rolled over value shown distribution will be higher for tax purpose. This does not appear to fulfill the justification for the rollover. Yes, the same number, quantity of shares rolled over. That fulfills the property requirement but now the value amount in question.
Thank you
Permalink Submitted by David Mertz on Tue, 2020-12-08 18:06
The brokerage will report on Form 1099-R the value of the stock at the time it was distributed. When rolling over shares in-kind, the dollar value that you treat on the tax return as having been rolled over or repaid is the value at the time of distribution, not the value on the date of the rollover contribution, despite the share value having changed in the interim. However, the receiving IRA custodian will only show on Form 5498 the value of the shares on the date of the rollover contribution, so it’s probably prudent to include an explanation statement with the tax return to justify the difference between the distribution value and the Form 5498-reported rollover value.
Permalink Submitted by Alan - IRA critic on Tue, 2020-12-08 18:09
The value shown on the 1099R will in most cases differ from the actual value at the time of the rollover contribution that is reported on Form 5498. The IRS is aware of this difference, but has not issued formal reporting guidance for taxpayers. To reduce the chance of an IRS inquiry regarding tax return rollover reporting or the IRS thinking that perhaps a complete rollover was not completed, an explanatory statement indicating that security shares were distributed, and that all those distributed shares were rolled back would be advisable in this case.