“Can I claim a loss when all the amounts in all of the Roth IRA accounts have been distributed and the total distributions are less than the unrecovered basis?”---->As long as you cash out all of your R- IRA account( I mean as long as you have received 100% of your R-IRA distributions and your balance in your R-IRA is zero as you said), you can deduct the loss by reporting it on Form 1040 Sch A, itemized Deduction, MISC. deduction subject to 2% of AGI, for the amount lost relative to the basis. UNLESS you itemize your deduction on Sch A, you can’t deduct the loss on your return.
“Also, how does one go about deducting these losses on their tax return?”---->As said above to deduct the loss form your R-IRA distributions, you need to itemize your deduction son Form 1040 Sch A line 23 , and you MUS file only Form 1040, NOT Form 1040A/1040EZ. You can itemize your deductions on Sch A as long as your itemized deduction amount is MORE than your standard deductions.In addition, miscellaneous deductions are not allowed for purposes of the alternative minimum tax (AMT), so you could lose the benefit of the deduction if you are subject to AMT taxes.
Last edited by Wnhough : 12-20-2011 at 03:11 AM.