Today TaxMama hears from Gary in Oregon who wants to know. “I have asked 2-3 tax professionals the same question with different answers. So mama help me! I have 2 IRA’s. In one IRA I bought a stock 4 years ago that is now worthless. I do believe that some day this could become a performing asset. If I transfer the stock to a ROTH in 2010. Do I use the basis or FMV of the stock for the conversion?”
What are you doing, taking a poll? You’ll use the answer you want – or the one you get most frequently… or?
That’s an interesting idea. Transfer a stock worth little or nothing to your Roth – and have it rebound. Hmmm…It’s an excellent idea.
However, I don’t think you can transfer stock. Don’t you have to sell it, then re-buy it?
Either way, you’re looking at the fair market value, not the basis, when you are looking at distributions from the IRA. The 1099-R that your administrator will issue will be based on the FMV. Call them and ask them what they will do. Wouldn’t that give you the most definitive answer?
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