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Subject Author Date
IRA distribution in shares of stock. Jeff Wisnia 11-04-2006
Posted by Jeff Wisnia on November 4, 2006, 10:35 pm
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 I'm going to be taking my first IRA distribution before the
end of 2006. A short article in the latest issue of "Bottom
Line Personal Edition" says that IRA distributions don't
have to be made in cash, they can also be made by
transferring shares out of the IRA.

As there's mostly stocks I'm happy with and minimal cash in
my IRA, I'm keen on the idea of avoiding broker's
commissions by transfering some stock from my IRA brokerage
account to my regular taxable brokerage account with the
same firm.

I assume that the dollar value of the distribution is
determined by the number of shartes and the stock's price on
the date it's transferred out, but how should that price be
determined? (Opening or closing, max or min that day?)

And, what would be the those shares' "cost" and "aquisition
date" for the purpose of calculating capital gain or loss
when and if they are subsequently sold?

Thanks guys,

Jeff

--
Jeffry Wisnia
(W1BSV + Brass Rat '57 EE)
The speed of light is 1.8*10^12 furlongs per fortnight.

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Posted by Phil Marti on November 6, 2006, 12:19 am
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> I'm going to be taking my first IRA distribution before the
> end of 2006. A short article in the latest issue of "Bottom
> Line Personal Edition" says that IRA distributions don't
> have to be made in cash, they can also be made by
> transferring shares out of the IRA.

Correct.

> As there's mostly stocks I'm happy with and minimal cash in
> my IRA, I'm keen on the idea of avoiding broker's
> commissions by transfering some stock from my IRA brokerage
> account to my regular taxable brokerage account with the
> same firm.
>
> I assume that the dollar value of the distribution is
> determined by the number of shartes and the stock's price on
> the date it's transferred out, but how should that price be
> determined? (Opening or closing, max or min that day?)

Sorry, I don't know. I'd call the custodian and ask.

> And, what would be the those shares' "cost" and "aquisition
> date" for the purpose of calculating capital gain or loss
> when and if they are subsequently sold?

The cost is the value (see above) and the acquisition date
is the date of the transfer. See IRS Publication 590.

--
Phil Marti
Clarksburg, MD

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Stuart A. Bronstein on November 6, 2006, 1:30 am
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>> I'm going to be taking my first IRA distribution before the
>> end of 2006. A short article in the latest issue of "Bottom
>> Line Personal Edition" says that IRA distributions don't
>> have to be made in cash, they can also be made by
>> transferring shares out of the IRA.

> Correct.

>> And, what would be the those shares' "cost" and "aquisition
>> date" for the purpose of calculating capital gain or loss
>> when and if they are subsequently sold?

> The cost is the value (see above) and the acquisition date
> is the date of the transfer. See IRS Publication 590.

If the stock is owned by an IRA the full value should be subject
to tax when it comes out. There is no deduction of basis
because the basis was paid for by pre-tax funds.

Stu

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Herb Smith on November 6, 2006, 12:19 am
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Jeff Wisnia wrote:

> I'm going to be taking my first IRA distribution before the
> end of 2006. A short article in the latest issue of "Bottom
> Line Personal Edition" says that IRA distributions don't
> have to be made in cash, they can also be made by
> transferring shares out of the IRA.
>
> As there's mostly stocks I'm happy with and minimal cash in
> my IRA, I'm keen on the idea of avoiding broker's
> commissions by transfering some stock from my IRA brokerage
> account to my regular taxable brokerage account with the
> same firm.
>
> I assume that the dollar value of the distribution is
> determined by the number of shartes and the stock's price on
> the date it's transferred out, but how should that price be
> determined? (Opening or closing, max or min that day?)

For stocks, the price is the average of the high and low
prices for the day of transfer. You will be taxed on that
price times the number of shares transferred.

> And, what would be the those shares' "cost" and "aquisition
> date" for the purpose of calculating capital gain or loss
> when and if they are subsequently sold?

Your "cost" for subsequent sale is the same as the transfer
value. Your holding period begins on that date also.

The net tax effect is the same as if you had sold the shares
in the IRA account, received the cash, and then repurchased
the shares in your taxable brokerage account.

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Ira Smilovitz on November 6, 2006, 12:19 am
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> I'm going to be taking my first IRA distribution before the
> end of 2006. A short article in the latest issue of "Bottom
> Line Personal Edition" says that IRA distributions don't
> have to be made in cash, they can also be made by
> transferring shares out of the IRA.
>
> As there's mostly stocks I'm happy with and minimal cash in
> my IRA, I'm keen on the idea of avoiding broker's
> commissions by transfering some stock from my IRA brokerage
> account to my regular taxable brokerage account with the
> same firm.
>
> I assume that the dollar value of the distribution is
> determined by the number of shartes and the stock's price on
> the date it's transferred out, but how should that price be
> determined? (Opening or closing, max or min that day?)

Average of high and low for the day.

> And, what would be the those shares' "cost" and "aquisition
> date" for the purpose of calculating capital gain or loss
> when and if they are subsequently sold?

The distribution value (see above) becomes the cost basis
going forward. The distribution date becomes the acquisition
date for determining the future holding period.

Ira Smilovitz

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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