<plusmail.archive[at]gmail.com> wrote:

- quote -

Yes.

--------------
Phil Marti, VITA Volunteer
Clarksburg, MD

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On Apr 13, 11:11*pm, Mark Bole <ma...[at]pacbell.net> wrote:
- quote -

In this case, the account was fortunately a standalone account,
segregated entirely from others. (That is, both the traditional IRA
and the Roth IRA involved in the contributions and transfers have no
other assets.) So the full value of the account was transferred in
both the recharacterization and the conversion. That makes things a
bit easier.

My understanding is that the full $4000 could be deducted in 2007
because of the recharacterization (assuming T was otherwise qualified
to deduct traditional IRA contributions), and the appropriately
reported income for 2008 from the conversion was the value of the
account when it was converted. Is that right?

Thank you both for the help!

-P

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Phillip Marti wrote:
- quote -

water?

- quote -

It may have been incorrectly reported. How much was actually
transferred from one account to the other due to the recharacterization?
Was the 2007 contribution segregated from other amounts in the overall
Roth, or is the gain/loss to be pro-rated over the entire Roth balance?


- quote -

Sounds right to me.

-Mark Bole

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

<plusmail.archive[at]gmail.com> wrote:

- quote -

I think what's creating your later confusion is attending to the details of
something that was totally resolved on the 2007 return. That's all blood
under the bridge as of 1/1/2008, and you ignore it when looking at the 2008
transactions.

- quote -

Yes, as long as step 5 is more than 30 days after step 4. See
"Reconversions" on page 30 of Pub 590.

--------------
Phil Marti, VITA Volunteer
Clarksburg, MD

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

[I posted this to misc.taxes, but on reflection this is probably the
better place.]

I'm having an awfully difficult time trying to understand how the
regulations governing Roth IRAs might apply to a situation like the
following. Consider the following facts:

1. In 2007, T contributes $4000 to a Roth IRA.

2. In 2008, before the 2007 filing deadline, T realizes he was
ineligible to make a Roth IRA contribution in 2007, so he
recharacterizes the contribution as a Traditional IRA contribution.
He deducts $4000 on his 2007 Form 1040.

3. Still in 2008, about 90 days later, T converts the Traditional IRA
to a Roth IRA and declares income for 2008 equivalent to the value of
the IRA on the day of the conversion.

4. By 2009, but before the 2008 filing deadline, the value in the IRA
has fallen sharply, and T has other reasons (to qualify for a credit)
to try to reduce taxable income. So he recharacterizes step #3 to
undo the conversion.

5. In late 2009, T reconverts the IRA into a Roth IRA.

Are all these steps valid? If not, where does it go wrong? Is the
second conversion, step #5, an allowable conversion but not an
allowable way to adjust the addition to income from the conversion?
(That is, would the conversion in step #5 succeed but not change the
taxable income for the conversion from what it was in step #3?) I'm
just not sure of the right way to approach this, since the closest
regulations seem to imagine an initial *conversion* rather than an
initial *contribution*.

Many thanks for any thoughts.

-P

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >