What is the taxpayer's basis for nondeductible IRA contributions when distributed in California?

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The basis for nondeductible IRA contributions when distributed in California is the amount of the nondeductible contributions themselves. This means that when a taxpayer makes contributions to a traditional IRA and these contributions are not tax-deductible (often because the taxpayer's income exceeds certain limits), they establish a basis in the IRA equal to the total amount of those nondeductible contributions.

When these contributions are eventually distributed, they can be withdrawn tax-free up to the amount of the basis. This is significant because the taxpayer won't be taxed again on the amount they already paid tax on when they originally contributed to the IRA. Thus, option A accurately reflects that the taxpayer’s basis for nondeductible contributions is simply the amount of those contributions.

The other choices do not accurately describe the basis for nondeductible contributions. California compensation refers to income earned and does not relate to IRA contributions specifically, while federal deduction relates to contributions that were deductible, which is not relevant for nondeductible contributions. Required minimum distributions pertain to mandatory withdrawals from retirement accounts once the account holder reaches a certain age and do not address the basis of nondeductible contributions.