IRA distribution in shares of stock.

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.

> > > > > > > > >
Reply to
Jeff Wisnia
Loading thread data ...

Correct.

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

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

Reply to
Phil Marti

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.

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.

Reply to
Herb Smith

Average of high and low for the day.

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

Reply to
Ira Smilovitz

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

Reply to
Stuart A. Bronstein

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.