Message Font: Serif | Sans-Serif
No. of Recommendations: 0
Does current tax law allow me to deduct losses from equities sold that resided in my Roth IRA?</I

Generally, no. What happens in a Roth stays in a Roth ;). That means, its not taxable or reportable, or at all effects your tax return - that goes for both gains and losses.

Can I offset gains from stock sold in my taxable brokerage account with losses from stocks sold in my Roth?

Generally, no for the same reason as above.

Finally, does the wash rule apply the same between accounts? For example, can I sell "stock A" in my taxable account, wait >30 days, then purchase "stock A" in my Roth IRA account, and claim the loss to lower my cap gains tax burden for 2008?

If you wait > 30 days, then its not a wash sale, so you're just fine. You can sell it, claim the loss, and then buy it back in your Roth > 30 days later.

If, however, if you sold it in your taxable account and then bought it under 30 days in your IRA, then its a big question. Is it still a wash? The answer? No one knows for sure, but you're best off avoiding finding out.

Here's a large discussion of the topic if you're really interested in reading up:

Or, similarly, sell "stock B" in my Roth, wait >30 days, then buy it in my brokerage account and claim the loss?

Generally no again, for the same reason at the first 2.

Okay, so here's the reason I said 'generally'. The only exception is that if your Roth *as a whole* has a loss. Then, you can close out your Roth entirely and claim the total loss, subject to the Misc Deduction 2% AGI haircut.

This means that if you contributed $8000 to your Roth IRA, and now its only worth $3K, you can close the Roth and take a $5000 miscellaneous deduction. If you make $50K, 2% of that is $1000, so you can deduct $4000... assuming you itemize, etc, etc.

Usually this is a bad idea - because you're out some tax free funds for ever on - and because there's the 2% barrier and the standard deduction to overcome before it helps you any - but that's the complete answer.
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.