Roth Ira

[dcartwr884]

Client (couple) has had a ROTH IRA for over 5 years...they each liquidated their ROTH IRA in 2008...of course they received less then what they contributed over the years...
1.) none of this is reportable and taxable on line 15a and 15b and
2.) nothing is reported on 8606,
correct?
The code on the 1099-Rs was "J"...I was thinking I'd attached an explanation to the return.

[BHoffman]

Client (couple) has had a ROTH IRA for over 5 years...they each liquidated their ROTH IRA in 2008...of course they received less then what they contributed over the years...
1.) none of this is reportable and taxable on line 15a and 15b and
2.) nothing is reported on 8606,
correct?
The code on the 1099-Rs was "J"...I was thinking I'd attached an explanation to the return.

If you received a 1099R, then you should report it somewhere to avoid the dreaded CP2000 notice. I use form 8606.

If the total amount in the Roth was distributed and that amount is less than the basis, then the client can deduct the loss on Sch A subject to the 2%. This loss is not available for AMT.

I'm afraid we're going to be seeing more of these.

[dcartwr884]

thanks...yes, i agree with the Sch A treatment for the loss if all the IRAs have been liq...also, I guess I can force something on the 8606....but do you agree that all the distributions are non-taxable....just want to make sure...

[Gretel]

Yes, none of the Roth distribution is taxable.

[BHoffman]

I agree with Gretel

[Gene V]

Agree, if they are under 59 1/2, then form 8606 part III, needs to be filled out.