LT gain/loss
Bill has held GM stock in his IRA for 7 years and the market value has dropped from $25k to $15k. can he withdraw the GM stock directly or as a part of his RMD, transfer it to his Brokerage account in-kind, pay the tax on the RMD, then sell the GM stock and claim the LT capital loss on his tax return? Thanks
Permalink Submitted by Alan - IRA critic on Tue, 2021-10-12 14:47
He can do all of this, except the basis in the shares moved to the brokerage account will be their value on the date of distribution from the IRA. The loss occurred while in the IRA cannot be recovered, but the loss is pre tax since the shares were purchased with pre tax IRA dollars. Individual holdings in an IRA do not have individual cost basis since there are no cap gains or losses for activity in the IRA. Finally, the shares distributed to the brokerage account have a holding period that starts on the date of distribution from the IRA, meaning if there is a small gain before the sale in the brokerage account, it will be reported as a short term gain.