Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

A stock was purchased for $5 in an IRA. Five years later it…

Customer Question
A stock was purchased for...
A stock was purchased for $5 in an IRA. Five years later it was transferred to a brokerage account outside the IRA at a price of $10 and tax was paid on the $10 withdrawal from the IRA. Five years later the stock was sold for $20. What was the date of purchase and what was the basis of the stock?
Submitted: 2 years ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 16 minutes by:
6/16/2015
Tax Professional: Lev, Tax Advisor replied 2 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,857
Experience: Taxes, Immigration, Labor Relations
Verified
Hi and welcome to our site! You are correct - when an IRA owner takes a distribution in stock, that distribution is taxable event and the value of the stock on the date of the distribution is subject to ordinary income tax. The new basis for figuring gain or loss on any further disposition is now the value of the stock on the date of the distribution.In your situation that is $10. The holding period for long or short term capital gain begins on the day after the IRA distribution, not on the day the stock was originally purchased within the IRA.So the date of the distribution is treated as the "purchase date" for reporting purposes.
Ask Your Own Tax Question
Tax Professional: Lev, Tax Advisor replied 2 years ago
As for later transactions...
The new basis for figuring gain or loss on any further disposition is now the value of the stock on the date of the distribution.
In your situation that is $10.
The holding period for long or short term capital gain begins on the day after the IRA distribution, not on the day the stock was originally purchased within the IRA.
So the date of the distribution is treated as the "purchase date" for reporting purposes.
Let me know if you need any help with reporting.
Ask Your Own Tax Question
Was this answer helpful?
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,857
32,857 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,495 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,272 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
Capital gain calculation on a house that was my primary
Capital gain calculation on a house that was my primary residence then rental for 15 years. I bought a house in Feb 2000 in GA. I lived in it for 3.5 years until Oct 2003 then rented it for 15y until … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,272 satisfied customers
I have a capital gains question. It is stock. Not really.
not really. the stock sell will be pretty high in value. We're thinking of cashing out about 2 mil $… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,272 satisfied customers
Will I owe capital gains taxes on the sale of my home
Will I owe capital gains taxes on the sale of my home (either federal or state taxes)? Details: * I have lived in CA for the past 8 years (renting) * The home I am selling is in FL * I purchased the h… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,221 satisfied customers
What is my capital gains tax liability on commercial
what is my capital gains tax liability on commercial property inherited in 1991. assessed value at the time of inheritance was $171,000. Selling price would be $850,000; $200,000 at time of sale - bal… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,221 satisfied customers
Will capital gains on an annuity (it will change my tax
Will capital gains on an annuity (it will change my tax bracket) affect my social security more than the one year ? … read more
Dr. Fiona Chen
Dr. Fiona Chen
President
Ph.D.
1,027 satisfied customers
What is the 2018 Federal capital gains tax rate for married
What is the 2018 Federal capital gains tax rate for married filing jointly with combined incomes of <$325K? Also, same question for California. We are selling our home and expect a capital gain of … read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,119 satisfied customers
Capital gains tax on nonresident alien. A foreign trust owns
Capital gains tax on nonresident alien. A foreign trust owns 100% of shares of a US C corporation. C corporation is privately held (not publicly traded) and conducts business in the US. Then C corpora… read more
Lev
Lev
Tax Advisor
32,857 satisfied customers
IRS tax question: Say my income before capital gains is
IRS tax question: Say my income before capital gains is $400,000 and after capital gains is $250,000, do the capital gains get 20% treatment and the rest of the income get the lower treatment from $0-… read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,119 satisfied customers
Please help me calculate capital gains tax on piece of
Please help me calculate capital gains tax on piece of residential real estate (single family home) rented out that does NOT qualify for the homeowners exemption. I've read a lot about depreciation an… read more
Lev
Lev
Tax Advisor
32,857 satisfied customers
If I report the distribution listed on K1 line 19A, the
If I report the distribution listed on K1 line 19A, the software adds the difference between net rental income and the amount distributed and taxes the difference. So, do I need to enter the amount on… read more
Lev
Lev
Tax Advisor
32,857 satisfied customers
Where do I report capital gains distributions in Turbo Tax?
Where do I report capital gains distributions in Turbo Tax? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,119 satisfied customers
K-1 with LT capital gains. Also 19A Distributions of the
K-1 with LT capital gains. Also 19A Distributions of the same. Why does it double up on the tax return? How can I keep it from doubling up. … read more
Lev
Lev
Tax Advisor
32,857 satisfied customers
Does capital gains raise me into higher tax bracket? Stock
Does capital gains raise me into higher tax bracket? … read more
abci168
abci168
Principal
27 satisfied customers
I used a calculator to figure capital gains tax on the sale
I used a calculator to figure capital gains tax on the sale of my rental property in CA... do the figures look reliable? I am a hawaii resident. Will there be other taxes due besides capital gains? Th… read more
Carter McBride
Carter McBride
LLM
1,060 satisfied customers
Iowa Income Tax. Is 100% of capital gains on the sale of a
Iowa Income Tax. Is 100% of capital gains on the sale of a rental property deductible if the requirement is met for hours spent for management of the property? … read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,119 satisfied customers
On what lines do you report the final distribution of the
On what lines do you report the final distribution of the principal, no income, (K-1) as a trust beneficiary?… read more
Lev
Lev
Tax Advisor
32,857 satisfied customers
I would like assistance with capital gains tax questions
Hello,I would like assistance with capital gains tax questions involving the sale of a property in a trust. First, the proceeds for the sale of the property will be divided among the three trust benef… read more
Lev
Lev
Tax Advisor
32,857 satisfied customers
Is there a capital gain rate for corporations or the
HiIs there a capital gain rate for corporations or the corporation is taxed at the 21% rate as ordinary income ? In other words? if the crop earns only passive income then is it still the 21% tax brac… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
2,221 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x