Generally speaking, the entire amount in your IRA has not been taxed and your basis is generally irrelevant for tax purposes. The tax impact is usually felt when you start taking your distribution. At this time, assuming it is a qualified withdrawal, the entire proceeds of your distribution would be subject to your ordinary income tax rate irrespective of your basis.
This means the amount of income tax on your IRA distribution is based on the amount of the distribution and your original basis is not a factor! Further, the loss in the value of the IRA is not a deductible item either on 1040 tax return.
As a Taxpayer, you are not required to inform the IRS of your IRA value, usually this amount is already being reported annually to the Investment or Fianancial Institution that maintains your IRA's!
The basis is an important consideration when it comes to your Non-Deductible IRA or your ROTH IRA.