Tax Insights

Your Guide to State, Local, Federal, Estate + International Taxation


  1. Jon says:

    On Form 8606 in 2010 and 2011 I made an error which resulted in an incorrect basis being reported for my traditional IRA. I now realize that my basis for both years should have been zero. This error had no impact on the tax bill that was due for either year.

    How do I correct Form 8606 for 2010 and 2011 to show a zero balance for my traditional IRA basis? The IRS instructions for amending Form 8606 do not address this situation.

    Thank you in advance for your assitance.

    • admin says:

      Hi Jon,

      Since there was no impact on either your 2010 or your 2011 income tax returns, the easiest thing to do would be to correct the basis carrying forward on your 2012 Form 8606 to zero.

      Donna H. Laubscher, CPA

    • Kevin says:

      What if you contributed 30000 dollars to an IRA over several years and when you withdraw it it is only worth 20000 dollars. Are you allowed to take a capital loss?

    • admin says:

      Kevin –

      Thanks for your question and interest in our blog. See IRS Publication 590-B for information related to taxability of distributions from an IRA, including the situation when a loss can be recognized.

      Melinda Nelson, CPA

  2. aron prochko says:

    What to do if your tax records have been lost? Does the IRS know my IRA basis that I can send them an inquiry?

    • admin says:

      Hi Aron,

      Basis is not kept by the IRS. However, if you were diligent about filing your Form 8606, then you should be able to get a copy of that return from the IRS – though you would need to know the years to ask about. You may have better luck getting any basis in an IRA from your broker.

      Donna H. Laubscher, CPA