As of right now, my wife and I have combined losses of $9,418 in our Roth IRAs. Our basis is $24K and the balance is $14,582. According to my understanding IRS Pub 590, we can claim that loss on line 23 of schedule A if we withdraw the entire balance of our Roth IRAs. My tax software says doing so will increase my refund by $1,384.
First question (possibly more suited to misc.taxes): What are the mechanics of doing this? Would we have had to make the withdrawal during CY 2008? Or can we do it before April 15th and still claim the loss?
Second question: Is this a reasonable thing to do? Obviously, this would "unRothify" the $14,582. But the government will give us $1,384 to do so. That's an immediate 9% return. Not bad for government work.
--Bill