My client has $2,000 of IRA basis from a non deductible contribution made years ago. In 2007 she recieved $3,000 of IRA distributions from a deceased relative (code 4). I have always thought basis could not be used against these distributions but my software is allowing it. I have looked at the Form 8606 instructions and TTB and can't find any info on this. Can my client use some basis or not?
-
-
Kram,
If the person that received the IRA from a deceased TP is NOT a spouse, then the rolled over IRA is received as a non-deductible IRA. ie; when drawn out tax will have to be paid. TTB says the tax-free basis (if you have some) cannot be fully distributed until all funds in all traditional IRAs have been depleted.
Comment