IRA Losses

[Possi]

My client has closed all the IRA's he had, BUT the distribution code is 6, which is section 1035 exchange, not taxable.

My question is this, will that dist code 6 prevent us from taking the loss on all these accounts?

Every one of these has box 5 contributions far outweighing the box 1 distribution. They had a lot of losses.

Is this a good question?

[Burke]

Box 6 indicating 1035 exchange means this IRA was an annuity and was exchanged (treated as a rollover) to another annuity. So, no loss yet on this one.

[Possi]

Thanks

... I still like the thought...

[Burke]

I should have also mentioned, that if it truly was an IRA (deductible when he took it out or made contributions) there would be no loss anyway because it was never taxed. Are you sure it was an IRA? A regular annuity -- non-qualifed -- would have basis, but no loss until it is surrendered. And this indicates it was a rollover to another company. You can tell by the new contract (or the old one if it is still around.)

[Possi]

GOT it

I'm pickin up what you're puttin down.