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Lane
Lane, JD, CFP, MBA, CRPS
Category: Capital Gains and Losses
Satisfied Customers: 12701
Experience:  Have been providing Financial and Tax advice for 30 years.Concentration in Corporations, Estate, Income Tax and Business Planning
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In 2013 the tax service I use made an error by listing a

Customer Question

In 2013 the tax service I use made an error by listing a $50,000 LT capital loss that had occured in an IRA. I recently was informed by a friend that you can't declare an IRA loss unless you close out all of your IRA accts.
Can I file an Amended Tax return for 2013 that would remove the $50,000 loss or would the IRS say that at the time the 2013 returned was filed the tax became due on the other IRA accts.?
Submitted: 1 year ago.
Category: Capital Gains and Losses
Expert:  Lane replied 1 year ago.

Hi,

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Yes, you NEED to file the amended return.

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And no, unless there was some sort of withdrawal, there was no taxable event at all (on that IRA or the others)

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You'll get a 1099-R for reporting taxable distributions from IRAs

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The reason you can't take a TAX loss on the IRA is that you have no basis in the IRA (if this is all pre-tax money - tax deductions for the IRA contributions - OR rolled from an all pre-tax 401k).

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You'll have less distribution to pay tax on once distributed, but a loss in an all -re-tax, where the income going into the IRA has never been taxed, is not a taxable event - you already got that benefit when you didn 't have to pay tax on the money going INTO the IRA.

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Now, if some of this was non-deductible (say you contributed to the IRA and had no tax deduction) then the business about taking a loss upon distributing everything would be correct (bot only to the extent of the part that is after tax, non-deductible, money)

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But again, yes, amending the return is what you should do here

Expert:  Lane replied 1 year ago.

Please let me know if you have any questions at all.

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If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the faces or stars on your screen, and then clicking “submit")

I know it takes an extra step, but JustAnswer won’t credit us for the work until you rate.

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Thank you!

Lane

I have a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security/Medicare, estate, corporate, both for-profit and non-profit, and tax advice on three continents, since 1986