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2 tax questions: inherited capital gains and mistaken roth contribution

Home Tax Reduction 2 tax questions: inherited capital gains and mistaken roth contribution

  • Avatar MAP2FLY 
    Participant
    Status: Physician
    Posts: 4
    Joined: 04/14/2019

    Hi everyone,

     

    Long-time lurker, first-time poster. I would appreciate some guidance as we are preparing our taxes.

    My husband received an inheritance. After selling stock shares, he incurred capital gains (appreciation after date of death) – received an estate K-1 which I entered into Turbo Tax. He also has some carryover capital losses (pre-populated from TT). In Turbo Tax, the net gain does not seem to be calculated (e.g., for round numbers: long-term capital gains: 100,000, capital loss carryover: 50,000, should net gain be 50,000 on which we would pay long-term capital gains taxes?). Is there something special we need to enter for this to occur?

    Also unbeknownst to me, he contributed to a Roth thinking he was eligible. rather than using Backdoor Roth. What can I do to fix this (or should I wait and amend taxes later)? Am thinking we need to recharacterize his Roth as traditional but thinking it is late in the game for filing 2018 taxes.

     

    Thanks again for your input.

     

    #206392 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7161
    Joined: 01/09/2016
    1. Yes, taxable LTCG s/b $50k.
    2. You have until 10/15/19 to recharacterize.

    You can just extend your return and pay any balance due along with first estimated payment with the extension in order to give you ample opportunity to complete. I don’t think you’d actually have to amend if you go ahead and file because you’ll only need to submit the Form 8606 and it can be done as a standalone submission. To me, though, I’d rather just do it all at the same time. No reason not to extend.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
    https://fox-cpas.com/for-doctors-only/

    #206411 Reply
    Avatar MAP2FLY 
    Participant
    Status: Physician
    Posts: 4
    Joined: 04/14/2019

    Hi Johanna, thanks for your reply. I reviewed the Schedule D in TT more closely and found that the carryover losses were taken into account. I will discuss with my husband about the options to rectify the Roth contributions.

    #206493 Reply

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