Roth IRA when owner dies

Technical topics regarding tax preparation.
#21
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You cannot deduct the brokerage fees to manage a Roth. You can (could) deduct the fees for them handling your regular investment accounts. That verbiage is talking about fees, not basis.
 

#22
Nilodop  
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Many don’t like relying on irs publications even if they support their stance. Irs stance in 2017 get any clearer than this?. Well, I know the Pubs are not "authority", so many, inclucing me, don't "rely" on them. But they are often a good starting point, and I've noticed that some on TPT use them extensively as a source of guidance. Yes, that excerpted guidance is clear. And it probably comes from a reg, rev rul, or other published IRS or court source. It may even be correct, but I'm not so sure as to Roth IRA losses.

As for what happens at the end of 2025, not into what ifs. Who knows what congress will do.. I'm not either. I'm simply trying to take into account possibilities in my planning. (I have a Roth, but it's heavily into gain, not loss, so this is unlikely to apply to me, though anything is possible).

As for the other statements and cites, here is a case.. Thanks, but isn't that just about trying to claim losses inside a traditional IRA, or did I miss something? But that gives me a segue into my question again. I started out in OP asking about a capital loss on liquidation of a Roth IRA. That got shot down. Then I accepted that it is a deduction, and found that it appears to be a misc. itemized deduction in year when that's a thing. But it's unclear whether that "loss/deduction" is attributable to exempt income (the Roth). That list from the Pub seems torelate to section 212, which covers expenses but not losses, as I read it in full here:
In the case of an individual, there shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year—
(1) for the production or collection of income;
(2) for the management, conservation, or maintenance of property held for the production of income; or
(3) in connection with the determination, collection, or refund of any tax.


Are you planing on holding on to this account hoping for a deduction?. No, but anything can happen.


You cannot deduct the brokerage fees to manage a Roth. You can (could) deduct the fees for them handling your regular investment accounts. That verbiage is talking about fees, not basis.
. Which verbiage?

I'm just a retired tax pro trying to figure this stuff out. May or may not have a lot of practical application.

So the narrow question remains. What authority allows deduction of a loss on liquidation of either a trad'l or Roth IRA as either a loss or an expense?
 

#23
Nilodop  
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Still wondering. Just hoping to understand it better.

RR 2002-84 involved repayment of an erroneous retirement account distribution in an earlier year, and it says
The deduction is allowable in the year that the single-sum repayment is paid by the taxpayer, but only if the taxpayer itemizes his deductions. A deduction under § 165(a) for an individual with losses that are incurred in a trade or business is considered a miscellaneous itemized deduction and, thus, is subject to the 2-percent floor established under § 67(a) for miscellaneous itemized deductions.
And that conclusion is from this comment in the RR.
A deduction under § 165(a) for an individual with losses that are incurred in a trade or business is considered a miscellaneous itemized deduction and, thus, is subject to the 2-percent floor established under § 67(a) for miscellaneous itemized deductions.

https://www.irs.gov/pub/irs-drop/rr-02-84.pdf
But I still can't find that loss in the list in section 67(b).

RR 87-102 is about legal fees incurred to collect disability from Soc Sec., which if deductible at all would be claimed as 212 expenses, and thus misc itemized deductions. The ruling cites sec 265 for its conclusion,
The amount of the section 212 itemized deduction otherewise allow­able for legal fees must be decreased to the extent that those fees are allocable to the portion of social security disability benefits not in­cluded in the taxpayer's gross in­come.

So in the Roth loss part of my question, it seems to me that the loss, which has now become a misc itemized deduction, is not allowed even in years where misc itemized deductions are allowed, because the loss/itemized deduction is directly related to the Roth income, which is not taxable.

Time to put this thing to bed. But I'm still unsure of the answers.
 

#24
Nilodop  
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Well, the old guy finally finds section 63(d) for the real definition of itemized deductions.
(d) Itemized deductions
For purposes of this subtitle, the term “itemized deductions” means the deductions allowable under this chapter other than—
(1) the deductions allowable in arriving at adjusted gross income, and
(2) any deduction referred to in any paragraph of subsection (b).
 

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