If stock is purchased inside an IRA for $56,000($3.50/sh) and is held for twelve year and now has a FMV of $330,000 and the IRA trustee transfers 2000 shares out of the IRA to the taxpayer at a FMV of $41,260, will the 1099R be issued for $41,260(FMV) or $7,000(cost basis)? If issued for $41,260, is it all oridinary income?
-
-
The 1099 will be for $41,260 and
It will all be ordinary income. There is no capital gain treatment on IRA accounts.In other words, a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.
Alexis de Tocqueville -
It will be ordinary income but it might not all be taxable. Client might have made non deductable contributions in earlier years. If he has been your client forever you should have his IRA basis. If not you need to ask some questions and review prior returns.Comment
Comment