bm30003700[at]aol.com wrote:
- quote -

"Worthless" might only be the custodian's opinion. To be sure, you
have to research the security itself. Maybe it's General Motors with
market value of zero, but.. not yet in chapter 11 or 7.

ChEAr$,
Harlan Lunsford, EA n LA

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <7094df72-3705-4c34-aabe-34aeb4b6174f[at]v5g2000prm.googlegroups.com> ,
bm30003700[at]aol.com <bm30003700[at]aol.com> wrote:
- quote -

If I were preparing the return, I would "correct" the $1 shown
on the 5498 to zero, wherever your software asks for this.

But it is not unreasonable to think you will get an IRS nastygram
and you will then have to once again explain how the stock was worthless.


You could also include a form 8275 to explain the $1 difference between
the 5498 and the actual worthless value as stated in the custodian's
letter. The 8275 will probably be ignored first time around, but
if you have later dealings with theirs you will pull it out and prove
it was not some late arriving theory.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Dec 15, 8:29*pm, kam...[at]panix.com (Arthur Kamlet) wrote:
- quote -

Also, just noticed custodian, in addition to issuing form 5498 showing
$1 value at 12/31/07 also issued a letter to my client during 2007
describing the only security in the IRA as "worthless", would this be
the sort of statement you mean that I could rely on to show zero value
for 8606 purposes? I wondered whether the IRS just
goes by the amount on 5498, and dissalows loss shown on form 8606 if
value shows on form 5498, or whether an explanation with the return
would be appropriate.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Dec 15, 8:29*pm, kam...[at]panix.com (Arthur Kamlet) wrote:
- quote -

Thanks very much for your answer. The IRA basis resulted from non
deductible contribution to regular IRA, rather than Roth IRA. Sorry I
forgot to mention this in my first post, though I suspect it doesn't
change your answer?

========================================= MODERATOR'S COMMENT:
If you substitute "Traditional IRA" for "Roth IRA" everywhere in
that message, that answer should still apply.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

In article <d404bec1-8703-4225-930a-5492666e700b[at]g1g2000pra.googlegroups.com> ,
bm30003700[at]aol.com <bm30003700[at]aol.com> wrote:
- quote -


To claim a loss on your Roth IRA, the total distributions must be less than
the tax basis for all Roth accounts together. All Roth accounts must
be drained down to zero. $1 is more than zero. Direct your IRA
custodian to dispose of the remaining stock, either by selling it for you,
having the cusotidan buy it from you for $1, or sending you an in-kind
distribution of the remaining stock -- a bad choice since there might
no longer be any agent to habdle converting to a certificate or direct
account.


- quote -

If you can get the custodian to say the accounts had zero value, and I
am not sure you can since there was $1 showing, I would go with that
statement. Otherwise you will have difficulty making the claim of zero
value.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Can a loss only be shown on an IRA with basis when the value of the
IRA is actually zero on form 5498?

My client received a distribution of $2500 in year 2007, which was
essentially the value of the account when the distribution took
place. The basis was $9155.

However, because the client still a worthless securities within the
IRA account, the custodian issued
a form 5498 showing an IRA balance of $1 at 12/31/07.

I was surprised to see that my program shows a $6555 loss on the IRA
when no entry is made for IRA value at end of 2007, but when a value
of $1 is entered, no loss is shown on the return. Would an
explanation with the
return, stating that the IRA was actually without value be appropriate?

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >