IRA Conversions w/Capital Loss Carryforwards
Can I convert my IRA to a Roth and combine the taxes on the conversion with the capital loss carry forwards I still have from my past stock losses (schedule D)?
This would help reduce my total tax liability on the conversion and extinguish my carry forwards that I can only take up to $3,000 each year.
If this is possible, how do you combine the two (conversion amount with capital loss carry forwards)?
Thanks in advance for your comments.
Permalink Submitted by [email protected] on Fri, 2010-02-19 14:15
Unfortunately the answer is no. An IRA conversion to a Roth IRA is considered to be ordinary income and capital loss carry forwards can only be used to offset other capital gains (except for the $3,000 per year allowance). If the funds were in a company plan invested in company stock, then there could be some potential offset if we used the NUA tax break, but you mentioned an “IRA”.