Using Tax Loss for Roth Conversion

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ddbonds
Posts: 34
Joined: Sat Mar 03, 2007 12:05 pm

Using Tax Loss for Roth Conversion

Post by ddbonds »

At the end of 2008 I sold VTSMX for a loss Short-Term and Long-Term with no offsetting gains on my federal return. For both ’08 and ’09 I used the $3k loss which I think reduced the remaining ST loss carry forward. At that rate it will take many, many years to deplete the losses recognized. My question is if I convert some of my traditional IRA’s to Roth’s in 2010 can I use these loss carry forwards as an offset. I have had the IRA’s for a number of years and they are spread among different funds. I assume the conversion is by account rather than the funds within the account. Also how would this map with regard to ST and LT gains and losses. I also have a taxable VFWIX with a gain that I was considering selling to move the funds into the new Total International since it has a lower expense ratio and an ETF. Thanks in advance for your insights
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tfb
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Joined: Mon Feb 19, 2007 4:46 pm

Post by tfb »

The loss carryover can be used to offset conversion income, or any other types of income, up to $3,000 a year.
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cliffedelgado
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Joined: Fri Apr 16, 2010 1:52 am

Post by cliffedelgado »

I believe the Roth conversion counts as ordinary income, so you would not be able to offset more than $3K of it using loss carryovers.
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