Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev Thread | Next Thread
Author: thewarbrd Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Selling for loss to make ROTH contribution... Date: 11/13/2001 6:36 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I'm considering selling some of my stocks (claiming the loss on my taxes this year) and using the proceeds from the sales to make my 2001 and 2002 tax year ROTH contributions. My question is if I re-purchase the same stocks in my ROTH can I still claim the capital loss if I don't wait a certain period of time? The only reason I'm jumping through this hoop is because ameritrade will only let me transfer cash between my roth and regular accounts, not stocks. I want to hold the stocks I have long term but I would like to get them tax sheltered in the ROTH.

Thanks in advance.
Print the post Back To Top
Author: sirclayton Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 55204 of 121061
Subject: Re: Selling for loss to make ROTH contribution.. Date: 11/13/2001 11:07 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I'm not sure if this helps any, but from the question you asked, I don't believe you can roll over stocks in a regular account into your ROTH IRA,, am i wrong? I think you have to actually buy the stock for the purpose of the IRA only..

SirClayton

Print the post Back To Top
Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 55205 of 121061
Subject: Re: Selling for loss to make ROTH contribution.. Date: 11/14/2001 12:09 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I'm considering selling some of my stocks (claiming the loss on my taxes this year) and using the proceeds from the sales to make my 2001 and 2002 tax year ROTH contributions. My question is if I re-purchase the same stocks in my ROTH can I still claim the capital loss if I don't wait a certain period of time? The only reason I'm jumping through this hoop is because ameritrade will only let me transfer cash between my roth and regular accounts, not stocks. I want to hold the stocks I have long term but I would like to get them tax sheltered in the ROTH.

I'll tackle the second part first...Ameritrade is not alone in requiring you to transfer cash into your Roth IRA, it's the law. You can only make IRA contributions with cash.

Can you avoid wash sale rules by selling in a taxable account and purchasing in an IRA? Maybe. There has been extensive discussion on this board in the past about this issue, with no clear consensus and no definitive guidance from the IRS. Very recently, someone posted (I can't remember if it was here or on another tax board) a response they had received from an e-mail request to the IRS. In it, the IRS response was that an individual and a trust account (the IRA) were considered to be separate entities and an action in one would not be affected by an action in the other. Unfortunately, IRS e-mail responses are not binding on either party so there is still no definitive answer.

Ira


Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: acm4tax Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 55208 of 121061
Subject: Re: Selling for loss to make ROTH contribution.. Date: 11/14/2001 2:18 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
It was me who received the IRS correspondence. Here's the response I got.

NOTE: Our response to your tax law question appears below. If you have additional questions on this or other general tax law topics, please return to our web site at: (http://www.irs.gov/taxlaw) to submit it. Please do not use your "reply" button to send a follow-up question.


Thank you for your inquiry. According to Internal Revenue Code Section 267(b), wash sale rules won't apply with regard to IRA's. Selling stock or securities, creating a loss, being purchase within 30 days by the IRA, is not a related party transaction. This is because IRA's have their own trustee and are a separate entity. The IRA can invest in many different items, even if you self-direct what to invest in.



Your Question Was:
Who does the IRS code refer to as being the same person when you buy and sell at a loss and then repurchase the same stock. Is a joint brokerage account owned by my wife & I considered the same entity as an IRA in my name? Does IRS deem it an occurence of a wash sale if the repurchase after a loss in a joint account is made by my IRA?


acm4tax@hotmail.com


Print the post Back To Top
Author: tacful One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 55228 of 121061
Subject: Re: Selling for loss to make ROTH contribution.. Date: 11/14/2001 10:32 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Check posts 54231 & 55063. Both are IRS responses to email questions like yours. Both say you can claim a tax loss, as do a couple more IRS responses I've read on this board.

Some posters counter that IRS email responses are non-binding. They also caution that if you take the loss and are audited, you may have to pay a penalty & interest, though they don't quote any response from IRS saying so.

Regards,
Tom

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev Thread | Next Thread
Advertisement