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Hi and welcome to Just Answer!If you take a distribution $100K from your IRA - that will be your taxable income (assuming all your IRA contributions were deducted from your taxable income). You will receive reporting form 1099R - which will report your total distribution and taxable amount - these amounts will be reported on form 1040 lines 15a and 15b. The loss on the investment property that was not used for producing income (business, rental, etc) - will be classified as capital loss. It will be fully used to offset your other capital gains. However if you have NET capital loss - only up to $3000 may be used to offset other types of taxable income. The capital loss will be reported on form 1040 line 13 - http://www.irs.gov/pub/irs-pdf/f1040.pdfDisallowed portion of the capital loss will be carried over to following years.Thus - if you will realize $112K net capital loss and will not have other capital gains - only $3000 may be used to offset your other taxable income including taxable income resulted from IRA distribution. So far - you will not be able fully offset your IRA distribution.Sorry if you expected differently.
Please be sure to ask for clarification if needed.
Clarification Does it make a difference if the property involved was a rental property?
Do I have anyone answering my "clarification" question?
Yes – that will be treated differently – the loss on a rental property will be reported on form 1040 line 14 and will be fully deductible against other taxable income.
Sorry for delay - the question was locked and I was not able to post.