Why is Q asking for a Cost Basis when I sell in my IRA?

Pamela Ryan

Why is Q asking for a Cost Basis when I sell stocks in my IRA? For SOME, not all, sales in  my IRA, Quicken pops up a window that asks me to specify a Cost Basis. IRAs do not need to specify a cost basis. Am I doing something wrong? I've tried to attach some screen shots but  this doesn't want to let me.

NotACPA

Securities in an IRA (or other retirement type account) need the cost basis in order to calculate the performance/return on the investment(s) ... even if not needed for tax purposes.

AND, if you made any non-deductible contributions to that IRA ... then you need the Cost Basis for tax reasons.

Tom Young

This sort of question gets asked from time to time since many people understand that the "capital gain" associated with the sale of a stock inside an IRA is irrelevant to their income tax reporting.  None the less, the sale of a stock inside an IRA does produce a capital gain or loss in its most fundamental sense: Proceeds - Basis. 

As NotACPA states the basis certainly IS needed for normal performance and return calculations.  After all, the IRA is an investment account not fundamentally different that an after-tax brokerage account except for some pecuiler tax issues, so any "investor" with an IRA wants to see the same information.

As far as I know Quicken doesn't keep track of "basis" for tax purposes.  In order to do that it would have to ask "is this a deductible or nondeductible contribution?" and it doesn't.  At least it never did when I was making contributions.

Jim_Harman

Quicken tracks your cost basis and realized gains in all investment accounts for performance tracking purposes but by default only includes the ones that are not marked "tax deferred" in tax reports.