Stock transfer from IRA to meet the RMD

4est

In December 2019, I transferred stock from an IRA to my regular stock account for the RMD. Quicken has not taken into account that the IRA is a tax deferred account. The cost basis for the stock after the transfer (for tax purposes) is the value of the stock at the time it was transferred out of the IRA. Quicken is going back to when the stock was purchased in the IRA to determine the cost basis.

How do I get Quicken to reflect the proper cost basis for tax purposes?

Chris_QPW

You are confusing cost basis with the value of the security.

Cost basis is the amount you paid for the security, it isn't the value of the security at the time of sale.

The reason for wanting to know the cost basis is because you pay taxes on the "income".  And income is sale price - cost.

Now for RMD the sale price is important because you are required to sell a certain percentage of your holdings, and that is calculated out as an amount.  So the value of your security at the time of sale is the RMD.

But even for RMD you don't pay taxes on the "sale price", you pay it on the "income".
The calculating of taxes is no different than any other withdraw from a deferred tax account like a Traditional IRA or 401K account.

J_Mike

My approach for this;
In the IRA accounts record a Sell for the holdings being transferred.
Transfer the cash.
Enter a Buy for the holdings.

The cash transfer is recognized as a distribution for tax purposes.
The holdings are recorded I with the proper cost basis.

Rocket J Squirrel

Chris_QPW said:

Cost basis is the amount you paid for the security, it isn't the value of the security at the time of sale.

Yes it is, because of the transition from tax-deferred to taxable account. The security obtain a new basis.

J_Mike said:

In the IRA accounts record a Sell for the holdings being transferred.
Transfer the cash.
Enter a Buy for the holdings.

The cash transfer is recognized as a distribution for tax purposes.
The holdings are recorded with the proper cost basis.

Yes, this is a good way to do it. Not being a tax expert, though, I wonder whether the holding period for the shares potentially changes from long-term to short-term. Quicken certainly would consider the shares newly bought. But what does the IRS say? I have searched but did not find.

Rocket J Squirrel

Further searching comes up with this, answering my question above.

Just as your basis resets with the transfer, as far as the IRS is concerned, so does the time frame for how long you have owned the stock. Your holding period begins anew with the transfer, so you must hold the stock for more than a year for a profit to qualify as a tax-favored long-term capital gain if you sell the stock from the taxable account.

https://www.kiplinger.com/article/retirement/t055-c000-s004-shift-stock-to-satisfy-your-rmd.html