Todd, age 60, has made contributions of $75,000 to his
traditional IRA, of which $15,000 were nondeductible contributions.
He is considering taking a $20,000 distribution from his IRA, which
currently has a fair market value of $175,000. When calculating the
nontaxable portion of his IRA, which of the following formulas is
CORRECT?
Nontaxable portion = nondeductible contributions Ă· [(IRA
balance at the beginning of the year + the IRA balance at the end
of the year) Ă· 2] Ă— IRA distributions
Nontaxable portion = nondeductible contributions Ă· (IRA balance
at the beginning of the year + any distributions taken during the
year) Ă— IRA distributions
Nontaxable portion = [(nondeductible contributions prior to
current year + all contributions for current year) Ă· (balances at
end of current year + distributions received in current year)] Ă—
total distributions during current year
A)
I only
B)
II only
C)
III only
D)
None of these