UEarlier this year, I took a considerable loss when I sold some bank stocks I had owned. Also, I have an individual retirement account invested in stocks, bonds and mutual funds.
The IRA is not large, but I would like to minimize the income tax when I liquidate it.
If I withdraw money from my IRA, can I use the loss from the bank stocks as a deduction to offset the tax due on the sum withdrawn from my IRA?
Yes, at least in part. The loss on the bank stocks you sold is a capital loss. And up to $3,000 in capital losses can be used each year to offset ordinary income, including money withdrawn from an IRA, which counts as income, said Robert J. Dudzinsky, manager of the Philadelphia office of BBO Seidman, the accounting firm.
If the loss from selling the bank stock exceeded $3,000, you can carry over the excess to offset income in future years. If you sold stocks or other securities at a gain during 1993, the loss on your bank stock also can be used to offset the gain.
Several IRS publications might be helpful: Publication 590, “Individual Retirement Arrangements”; Publication 544, “Sales and other Disposition of Assets”; and Publication 550, “Investment Income and Expenses.” IRS publications can be ordered by calling 800-829-3676.
