Bob721 asks:

However I do have another question: In early 2001, we put $4,000 in Roth IRA's, buying shares of the Nasdaq 100 (QQQ's). Beacause our AGI was much higher than we estimated, we need to sell the shares and withdraw the funds, which is now worth about $2,800 (ouch!)

My accountant does not believe that I can claim a loss on the sale of the shares. Is this accurate???

Your accountant needs to learn a little more about IRAs. He/she should have known you could contribute to a nondeductible traditional IRA, and he/she should also know that when you have a basis in your IRAs, it may be possible to claim a loss on that basis when the IRAs are liquidated. You -- and definitely he/she -- should read pages 32 and 59 of IRS Publication 590 (Individual Retirement Arrangements) available for download at http://www.irs.ustreas.gov/forms_pubs/pubs.html.

In your case, all the nondeductible contributions you made to all of your Roth IRAs constitute your basis. If you cash in all of your Roth IRAs and have a loss based on those contributions, then the loss may be claimed as an itemized deduction in the Miscellaneous section of Schedule A of your Form 1040. To the extent that loss exceeds 2% of your adjusted gross income, it will serve to reduce your taxable income and your income taxes due.

Regards..Pixy