The IRS Audit Blog

Posts Tagged ‘ira’

Question: Claiming losses in ROTH IRA.?

I closed my Roth IRA in 2009 and want to claim losses on Schedule A.
In 2003 I converted Simple IRA to Roth IRA and the amount ($12000) is indicated on that year form 8606. Also I made contributions to this ROTH IRA account in 2005 and 2006 ($4000 each year). But looking at 2005 and 2006 Federal return I do not see any indication of these contributions (no form 8606). I do my taxes using TaxAct so I probably put the contribution but 8606 was not generated.

So now I need to establish the basis and every publication says that I have to use 8606 tax forms from previous years to do that. So even though I contributed $20K the IRS knows only about $12K.
My question is: can I still use the basis of $20K? I have brokerage statements from previous years that show the contributions made.

Thanks.

Answer: Sure. That is the correct basis.

The brokerage firm reported the contributions to IRS each year so they do have a recorde.

Twin savings goals, one account?

Dear Dr. Don, I want to save money for the education of my 10-year-old child. What is the best way to do this while keeping an eye on my retirement , too? I guess my questions are: Which type of savings plan can take care of both? What will be the tax advantages?

Calendar

Submissions for “Community Calendar” are required two weeks preceding the date of publication. Send to: Mary Ann Bottari, Pioneer Press, 3701 W. Lake Ave., Glenview IL 60026; mbottari@pioneerlocal.com. Information may be faxed to (847) 486-7495.

Self-Directed IRA | Real Estate IRA | Guidant Financial Group

Question: Is inheritance money taxed or taxable?

A relative of mine has recently passed away, prior to his passing, he informed me that he had left me some money in the form of an inheritance. My question is, does money that you inherit from family get taxed or need to be reported at all to the IRS?

Answer: 1. Any thing (money and property) you receive as gift or inheritance, you (the receiver) don’t pay any federal tax liability. About any state tax, you need to check from your state’s web site.

2. If you inherit a property, your cost basis is the valuation (Fair Market Value) of the property at the date of the decedent’s death or the FMV (Fair Market Value) on the alternate valuation date if the personal representative for the estate elects to use alternate valuation.

3. If you sell the inherited property at a price up to your cost basis you don’t have any taxes due. However, if you sell the property at price more than the cost basis to you, then you pay the taxes on the profit (sale price minus your cost basis). Report the sale on schedule D of Form 1040.

Why Your Will Should Name Designated Beneficiaries

?? ??by George D. Lambert (Contact Author | Biography) Congratulations! You finally decided to

Federal Personal Income Tax Exemptions

Question: How can I put intellectual property I create; a copyright, patent, etc. into my self-directed IRA or 401K?

I have learned that some creative investors are buying Domain Names (URLs) with 401K accounts. This method of turning a bright idea into retirement funds fascinates me-and I wonder if anyone knows the mechanics for doing the same thing with intellectual property like a copyright? Buying an existing copyrighted material with retirement account funds seems straightforward-but what about for a idea you conceive yourself? Does anyone know of a blog, forum or IRS ruling on this?

Answer: I don’t know that you can but I would suggest asking a professional IRA source that could give you the most accurate response, as well as give you some suggestions.

http://www.irafinancialservices.com/

Avoiding “Prohibited Transactions” In Your IRA

Between the time you contribute to and distribute from your IRA , you will be working to ensure that your assets provide the best possible return. However, there are some limitations on what you can do. When investing your IRA assets or implementing certain transactions, you must exercise caution.

Self Directed IRA Tips With Give the IRS the Slip

Question: I have a traditional IRA and a Roth. Can I make an allowable distribution from my trad to my roth tax-free?

This seems to indicate that I can. Does anyone have experience with this?

http://www.irs.gov/publications/p590/ch01.html#d0e4612

Allowable conversions. You can withdraw all or part of the assets from a traditional IRA and reinvest them (within 60 days) in a Roth IRA. The amount that you withdraw and timely contribute (convert) to the Roth IRA is called a conversion contribution. If properly (and timely) rolled over, the 10% additional tax on early distributions will not apply.

Answer: You may rollover your traditional IRA into a Roth IRA. Normally, contributions to a traditional IRA are made with pre-tax dollars; whereas, contributions to a Roth IRA are made with post tax dollars.

Thus, when you rollover a traditional IRA into a Roth IRA, the amount of the rollover is going to be taxed in the year of the rollover. This is because you are converting the pre-tax dollars to post tax dollars. Unlike traditional IRAs, when you take distributions from the Roth IRA, the distributions are tax free.

However, since it is a qualified rollover, there is not the additional early distribution penalty of 10%.

Marriage won’t wreck Roth IRA conversion

Eligibility for a Roth IRA does not depend on a spouse’s retirement investment choices.