Ask TaxMama.Com Tax Information With A Mother's Touch Published by Eva Rosenberg, MBA, EA Volume 6, Issue 264        June 25, 2004

TaxMama's Resources & Specials Summer News & Tips Wasted Capital Losses? Unreported Income Conjoined Student Loans Keeping Records   Congressional Update IRS Is Hiring!   Sexual Harassment Case   E-Mail  This Page To A Friend Your email: Your name: TO email:

Wasted Capital Losses? » From: Oklahoma City, OK Dear TaxMama: I have several thousand dollars of mostly long-term capital losses from some bad years in the stock market. My wife and I (both 80) each have Regular IRA accounts funded with pre-taxed dollars. Is there a way to withdraw from our IRAs and put the money into Roth IRAs and use the capital gains loss carry-forward to reduce the income tax due upon withdrawal from the regular IRA? Is there a limit? John Hi John, You have my deepest sympathy. We all lost a fortune on the market. However, those losses will sit there, being written off $3,000 at a time, until you have capital gains. If you pull the money from your regular IRAs, you will pay tax on them. If you roll them over to ROTHs, you will pay tax on the amount you take out and roll over to the ROTH. However, if you have high medical deductions, your medical expenses may help reduce your taxes on the money you draw from the IRA. Oh, another way to use up those capital losses? Have someone give you gifts of stock that has appreciated substantially. If your friend or family member would have a large gain, but your loss would absorb it - perhaps you can split the tax savings - and you and your wife can gift your friend back some of the money after you sell the stock? Good luck! Best wishes, Eva Rosenberg Your TaxMama

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