Holding Period for SEP

[Golden Rocket]

...Title of thread is not a misnomer. There can actually be a holding period question for an SEP/IRA.

Riley has a SEPIRA with Stocks instead of Mutual Funds or Insurance company crap. On 8/12/2002 he purchased 100s of XYZ at $24 for $2400. In 2005, Riley turns 60 years old.
In April 4, 2007, he transfers all his XYZ stock into an ordinary brokerage account, but the stock is worth $3800 at that point in time.

Riley's $1400 gain is not taxable while in the SEP, but upon transferring it out, incurs income for the full $3800 which he will receive on a 1099-R. While in the SEP, his XYZ stock had zero basis.

Later his XYZ holding has dropped to $3100, and he sells on December 1. He is entitled to a capital loss of $700, as his basis was obviously $3800.

What is his holding period? 8/12/2002? 4/04/2007? anything else?

[JohnH]

Short term loss

Off the top of my head, I think his holding period began when he established basis - 4/4/07. So he has a short-term capital loss of $700. He never owned the stock while it was in the SEP - it was held by the trustee for his benefit.

[Golden Rocket]

Yes, but...

...inherited property was never owned by a party either, but they do receive long-term holding status.

John, actually I agree with you -- if I had to interpret this based on my gut feelings, the holding period would begin when the stock transferred OUT of his IRA. However, I can't find a cite, and I've learned not to trust what makes sense. Thanks for your response.

Your Bobcats won tonight - breaking a seven-game losing streak...

[dsi]

I also must agree with John. With regards to the LT holding period for inheritances, that is simply the law.