Accounting Treatment of Taxable IRA Distributions

[Les]

On 05/06/2013 04:06 PM, Mike or Penny Novack wrote:
>
>> On 05/06/2013 10:31 AM, Paul Schwartz wrote:
>>  
>>
>>> To me some of your problem comes from having listed your IRA in your
>>> assets; it doesn't really belong to you yet.
>>>   
> >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
>
>>>> Folks,
>>>>
>>>> Well it it is finally time that I move money from my IRA to my
>>>> checking
>>>> account...
>>>>
>>>> IRA Cash Holdings ---> IRA Distributions(Taxable)
>>>> IRA Distributions(Taxable) ---> Checking Account
>>>>
>>>> The IRA Distributions(Taxable) account is an Income Account,
>>>> correct? How
>>>> do I get the money that is transferred to it to show as such.
>>>>
>>>>     
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
>>>   
>> I would disagree that an IRA is not an asset.  It is indeed an asset, as
>> it is something you own.  In my case, I have an asset called Investments
>> (under Current Assets) with my IRA a sub-account of it.  
>>
> Les, I think your problem is trying to be inconsistent.
>
> 1) If it's an asset, then converting it to another asset class ISN'T
> income.
> 2) If you want to think of the required distributions as income, then
> where it's coming from isn't an on (these) books asset.
>
> Suggestion --- when you put this asset onto your books there was an
> equity amount balancing it. You could consider separating that out
> (have its own child under equity). Then your transaction could be a
> split transaction:
> debit checking account and this "IRA drawing" account
> credit the IRA account and taxable income
>
>
> Michael
You misunderstand. The IRA is an asset, the distribution from the IRA is
income which decreases the IRA account and increases the Income account
and increases the bank (cash) account.

Les