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Inherited IRA Tax Implications
Hypothetical situation:
Say someone inherits an IRA - per RMD (Required Minimum Distribution) all of this money must be withdrawn from the account in ten years and is considered taxable AGI.
In order to avoid a pretty large tax bill from the inherited IRA and W2 every year for ten years that person buys real estate property every year in order to offset tax depreciation. Using passive losses or 'paper losses' this person is able to deduct up to 25k every year from their AGI (W2 + IRA withdrawal).
After ten years this person has deducted a total of ~250k and obtained ten properties.
The alternative is buying no real estate and paying ~24% of AGI every year according to their tax bracket.
Is this a possible scenario?