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emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2995
Experience:  IRS licensed Enrolled Agent and tax instructor
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I have an IRA Trust that I invested $50,000 about 25 years

Customer Question

I have an IRA Trust that I invested $50,000 about 25 years ago. The Trust distributed back to me in 2014 $4,999 in a Form 1099-R since the Trust sent a letter to me that their was not much value in it. I did not receive actual cash. How is this reported. I will have probably a total zero in this investment. Do I deduct this in Schedule A?
Submitted: 2 years ago.
Category: Tax
Expert:  emc011075 replied 2 years ago.
Hi. My name is ***** ***** I will be happy to help you.
Unless the contribution to your IRA you made 25 years ago was nondeductible (after tax), you will not be able to deduct losses. Losses on traditional IRAs that were funded only with pretax money are not allowed.
You said you received 1099R but no cash. What happened to the money? Did you rolled it over into another investment vehicle?
Customer: replied 2 years ago.
The trust resigned as custodian and transferred to another investment sponser. I have not contacted them. Since the original investment was in made with a Investment group named of Daystar Partners which stopped giving annual reports about 10 years ago.
Customer: replied 2 years ago.
What I should asked is at least I can zero out the $4,999 distribution as income with my $45,001 loss?
Expert:  emc011075 replied 2 years ago.
I see. I am assuming that the 1099R you received last year had distribution code G - Rollover in box 7. As long as it stay within IRA it is not considered a taxable income but you will still have to report it on your tax return as rollover, which I am assuming you did.
Once you take it out of the IRA, only the amount of the distribution you actually receive will be taxable. Unfortunately, losses on pretax money are never deductible. You cannot zero out the distribution with the loss since the money in your IRA were never taxed.
I wish I had a better news for you. Retirement accounts are not treated the same way as investment account.
Customer: replied 2 years ago.
Eva .... thank you the answer
Expert:  emc011075 replied 2 years ago.
You're very welcome.
I really wish I could give you a more positive answer. Unfortunately that the negative aspect of the deferred retirement plans. The money goes in before taxes and only the money that comes out are taxable. If you loose it while invested in deferred retirement plant, you cannot account for the losses.
If this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.