Question

In late 2020, the Polks come to you for tax advice. They are considering selling some stock investments for a loss and making a contribution to a traditional IRA. In reviewing their situation, you note that they have large medical expenses and a casualty loss (in a Federally declared disaster area), neither of which is covered by insurance. What advice would you give the Polks? please answer in your own words.

Answer 1

Az Polks selling the existing stock and have a and investing large medical expenses and casualty loss neither this une can say that falks selling the existing Stock Hove, setting the medical expensel and casualty olare and investing semaining andut in Traditional The sale of the stock investment will be result in a capital loss. The capital loss will and beny abblied against the ordinary income to acrive at AGI. The contribution to the traditional IRA is a deduction for AGI. Thus, both the capital loss and the IRA contribution veeduce the AGI. By seeducing AGI, the Polks will increase their allowable medical and casualty deductions. [In 2020, the medical, deduction is the excess over 10% of AGI, the casually lass is also the excess over 10% AGI capital gain any the