Questions and Answers
The year-end fair market value (FMV) of an IRA is $40,000 (1,000 shares of stock valued at $40/share). We calculate the required minimum distribution (RMD) to be $2,000. The IRA owner chooses to take his RMD in stock rather than cash. The stock at the time of distribution is valued at $50/share. How many shares do we distribute–-50 shares (based on a value of $40/share) or 40 shares (based on a value of $50/share)?
IRA custodians/trustees report distributions on IRS Form 1099-R. The IRS Instructions for Forms 1099-R and 5498 tell payers to show the FMV of the property on the date of distribution. In this case, the custodian/trustee would distribute 40 shares, resulting in a distribution amount of $2,000 reported on Form 1099-R.
(Posted: 01/30/2008)
