Today's Quote:
Did you ever notice that when you put the words "The" and "IRS" together, it spells "THEIRS?"
~ Author Unknown

Meals & Incidental Expenses and Lodging by MonthPer Diem Rates Look-Up

Larry Villano, Publisher of

Can I Deduct a Loss in My IRA?

The quick answer is, YES if you have a ROTH IRA and NO if you have a Traditional IRA (there is an exception that applies to non-deductible contributions).

When it comes to deducting losses in IRA accounts, the key is understanding the concept of basis. You must have a tax basis to deduct a loss. So, how do you know if you have a tax basis in your IRA account? Read on.


Contributions to your ROTH are AFTER-TAX contributions. Since your contributions have already been taxed, the balance in the account represents your basis in the account.

In the future, if you close your ROTH account and your withdrawal is LESS than your BASIS in the account, you have a loss.

For example, if your ROTH account balance on December 31, 2015 is $10,000, and the account balance on December 31, 2016 is $6,000, and you close the account on January 2, 2016 and withdraw the entire $6,000, you would have a $4,000 loss.

Now the question is, how do I deduct my loss? Follow the rules.

Rules for Deducting a Loss in a ROTH IRA Account:

  1. If you have one or more ROTH IRA accounts, you must close ALL the accounts, even if one or more of them has a profit.
  2. All the funds in all your ROTH accounts must be distributed to you. In other words, you must actually receive the funds; you cannot deduct a paper loss. If you happen to have a traditional IRA in addition to your ROTH IRA, you only have to close the ROTH IRA and NOT the traditional IRA. The traditional IRA is treated separately.
  3. You must itemize your deductions on Schedule A.
  4. You deduct the loss on Schedule A as a Miscellaneous Deduction and subtract 2% of your adjusted gross income (AGI) from the loss. The remaining amount is your deduction.


  • Your AGI is $50,000.
  • The loss in your ROTH account is $4,000.
  • You subtract $1,000 (2% x $50,000) from the $4,000 loss
  • You claim a Miscellaneous Deduction of $3,000 on Schedule A


Contributions to traditional IRAs are generally PRE-TAX contributions, and therefore, no tax basis exists in the account. This means All withdrawals are subject to taxes, regardless of the amount of value lost in the account.

There is an exception. If you made non-deductible contributions to your traditional IRA, you would have basis in your traditional IRA account. Basis would be the sum of all non-deductible contributions in the account. But in reality, most people don't make non-deductible contributions to their traditional IRAs.


New York Times Hypocrisy Exposed After Blasting Trump for Not Paying Taxes

So, just what is Trump being accused of?

Well, it seems the stickler for the New York Times, in their Oct. 1, 2016 article, revolves around a $916 million net operating loss (NOL) dating back to 1995. The Times learned about this loss after one of their reporters, Susanne Craig, found pages of Trump’s 1995 tax returns in her mailbox.

The article, in an accusatory tone, goes on to say that Trump used the NOL to reduce his taxable income of other years, thereby avoiding the payment of taxes.

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Louisiana flood 2016

Retirement Plans Can Make Loans, Hardship Distributions to Louisiana Flood Victims

The Internal Revenue Service today announced that 401(k)s and similar employer-sponsored retirement plans can make loans and hardship distributions to Louisiana flood victims and members of their families.

Participants in 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with 457(b) deferred-compensation plans may be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules.

Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures. Retirement plans can provide this relief to employees and certain members of their families who live or work in the disaster area.

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Donald Trump's Economic Plan August 8, 2016 in Detroit

The 2016 second quarter economic growth rate was an anemic 1.1%, recently revised down from 1.2%. It was the third consecutive period in which the economy advanced at less than a 2 percent annual rate, the weakest in four years.

Trump's economic plan promises to be a positive step toward America's economic revitalization. The goal of his plan is jobs, growth, and opportunity.

Read More and Watch Video >

Hillary Clinton

Hillary Clinton's Economic Plan August 11, 2016 in Michigan

Hillary Clinton's economic plan proposes increased government spending ("investments") and taxing high income earners and businesses. The American Action Forum says her plan would hike taxes by $1.3 trillion and boost spending by $3.5 trillion over the next decade, dramatically increasing our national debt.

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start-up costs

How to Deduct Start-up Costs and Organization Costs

You may elect to deduct up to $5,000 of start-up costs in the year your business begins operations. The $5,000 first-year deduction limit is reduced by the amount of start-up costs exceeding $50,000.

Start-up costs that exceed the first-year limit of $5,000 may be amortized ratably over 15 years. The amortization period starts with the month you begin operating your active trade or business.

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Phishing and malware email scams

400% Surge in Phishing and Malware Incidents

After seeing an approximate 400% surge in phishing and malware incidents so far this tax season (tax year 2015), the Internal Revenue Service has renewed a consumer alert for e-mail schemes being reported in every section of the country.

These emails look official and can fool taxpayers into thinking they are from the IRS or others in the tax industry, including tax software companies.

The objective of these emails is gain access to sensitive taxpayer information. To get a taxpayer's attention, these emails will refer to hot topics, such as refunds, filing status, confirming personal information, ordering transcripts, verifying PIN information, and a host of other tax-related topics.

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IRS meall allowance, two people having dinner

Tax Extenders Bill Signed Into Law December 18, 2015

On December 18, 2015, the President signed into law the tax extenders bill, entitled the Protecting Americans from Tax Hikes (PATH) Act of 2015. The new law makes more than 20 tax breaks permanent and retroactively extends others for two or more years.

Here's a rundown of key business, individual, and miscellaneous provisions:

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IRS meall allowance, two people having dinner

IRS Meal Allowance

Generally, the cost of meals are considered a personal expense and are not deductible, unless they meet certain IRS rules.

For example, if you go out to lunch yourself during the course of your work day or with a business associate, and there is no business purpose other than to simply get a bite to eat, the cost of your lunch is a personal expense and is not deductible.

When Meal Costs are Deductible:

You can deduct meal and entertainment expenses only if they are both ordinary and necessary (not lavish or extravagant) and meet either one of the following two tests (discussed below).

  1. Directly-Related test
  2. Associated test

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Travel expenses

What Are Travel Expenses?

Travel expenses are defined as:

  • Ordinary and necessary expenses...
  • related to your business, profession, or job...
  • while traveling away from home.

Travel expenses may be deducted by:

  • Self-Employed Persons
  • Employees
  • Unemployed Persons
  • Transportation industry workers (get special treatment)

Self-Employed Persons:

Self-employed persons deduct business-related travel expenses while away from home as a business expense.

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Hiding assets in Offshore accounts

Hiding Assets In An Offshore Account

Offshore accounts have been used to lure taxpayers into scams and schemes. According to the IRS, hiding money or assets in unreported offshore accounts remains on its annual list of tax scams.

Over the years, a number of individuals have been identified as evading U.S. taxes by hiding income in offshore banks, brokerage accounts or nominee entities and then using debit cards, credit cards or wire transfers to access the funds.

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Health care law and you.

Six Tips About Individual Shared Responsibility Payments

For any month during the year that you or any of your family members don’t have minimum essential coverage and don’t qualify for a coverage exemption, you are required to make an individual shared responsibility payment (a euphemism for penalty) when you file your tax return.

Here are six things to know about the penalty payment:

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affordable care act coverage, exemptions, and payments

Affordable Care Act Health Coverage Exemptions and Payments

The Affordable Care Act (ACA) will affect your federal income tax return.

The ACA requires you and your dependents to:

  • have health care coverage, or
  • an exemption from the coverage requirement,
  • or make a shared responsibility payment (pay a penalty) with your return for any month without coverage or an exemption.

Five things you should know about exemptions from the ACA coverage requirement and the individual shared responsibility payment that will help you get ready to file your tax return:

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affordable care act consumer alert

Affordable Care Act Consumer Alert!

Last tax season, 2015, some crooked tax preparers around the country victimized a number of uninformed taxpayers in connection with the penalty requirement for taxpayers without health insurance.


Starting January 2014, you and your family were required to either have health insurance coverage throughout the year, qualify for an exemption from coverage, or if you had no health insurance coverage, pay a penalty with your 2014 federal income tax return filed in 2015. The penalty is euphemistically called, The Individual Shared Responsibility Payment.

Many people already had qualifying health insurance coverage and did not need to do anything more than maintain their coverage.

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