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On our tax forms, my husband reported almost $200,000 in short-term

capital losses. Could that...
On our tax forms, my husband reported almost $200,000 in short-term capital losses. Could that have been from an IRA or 401K account? I thought that you only report these when you draw them upon retirement. We are no where near retirement.
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Answered in 1 minute by:
10/15/2013
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,871
Experience: 15years with H & R Block. Divisional leader, Instructor
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Robin D. :

Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.
You are correct. In order to claim a loss on IRA investments, you must withdraw the entire balance from all your IRAs of the same type.

Robin D. :

The short term losses would not have been reported if they were in an IRA and the IRA is still open.

Customer:

How about a 401K? If not 401K or IRA, is it an appropriate assumption that he took the money out of these accounts and that is why the losses appear on our taxes?

Robin D. :

Neither of those would be showing as losses unless the retirement accounts were closed. If he totally emptied the retirement account then he may have a loss but I doubt short.

Robin D. :

Can you ask him what generated the short losses?

Robin D. :

The loss would be generated if the basis in the retirement account was lower then contributions when the distribution was made.

Robin D. :

If you have a copy of the return to look over, look to form 8949

Robin D. :

The short term capital assets would be listed.

Robin D. :

You should be able to see from the description what capital assets he is claiming

Robin D. :

Please look on the Form 8949 and let me know. We may be bale to decipher what the loss was he claimed.

Customer:

Hi,

Robin D. :

Hi

Customer:

I don't have access to the Form 6252

Robin D. :

Ok if he used the 6252 that means an installment sale was made

Robin D. :

That would not have any thing to do with an IRA or 401K

Customer:

Sorry but what is an installment sale?

Robin D. :

That is when you sale property to someone and allow them to pay it off over more than a year.

Robin D. :

Do you know that the Form 6252 was attached to your return?

Robin D. :

You would need to look at the Form 8949 to see short and long term losses

Customer:

Thanks you have been very helpful. My husband filed for divorce and I've uncovered odd things like this and so I will have to ask my attorney to have him explain.

Robin D. :

Oh yes, especially if you filed joint!

Robin D. :

You are most welcome

Customer:

I know!

Robin D. :

I really enjoyed working with you – please feel free to request me again when you come back to ask another question.
You will find the request feature when you come back under your MY QUESTIONS section.

Robin D. :

Your positive rating is always thanks enough.

Customer:

I will. Of course, this is what got me in trouble this last time.....I guess that was, I do.

Robin D. :

Be careful with those

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,871
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified
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Category: Tax
Satisfied Customers: 15,871
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