[[ Happy New year to all,]]And Happy New Year to you...[[ I've converted my regular to roth IRA.]]Congrats!![[ The old IRA had a cost basis of 17k (non-deductable contributions) and a value of 50k. Thus a total of 50-17=33k is taxable and spread out over four years. 33/4 = 8.25k per year of taxable income.]]Yup...so far so good...[[ Is that 8.25k taxed at the cap gain rate (0.2 for most people, if held more than a year)?]]Nope. It'll all be taxed at your marginal tax rate...whatever that might be for you in each separate year. In 1998, you may be in the 28% rate...and that's what you'll pay. You may get a big raise in 1999, and move up to the 39% bracket...and that's what you'll pay in 1999. In year 2000, you may get demoted back to the 15% bracket...and that's what your pay for that year. See how it works. It'll all be at your marginal tax rate for that specific year.[[ Also, any errors with the tax basis computations?]]Nope...not that I see.TMF TaxesRoyWant to learn more about taxes and investing? Then we have a deal for you!! The Motley Fool Investment Tax Guide is now available through Fool Mart. Be the first one on your block to own this masterpiece. There is still time available to do that tax planning (and tax saving) before the end of the year. So just click on this link (http://www.foolmart.com/market/product.asp?pfid=MF+013+I) to read more about this amazing collection of tax information. (Apologies for the shameless plug…but it is a pretty good book…if I do say so myself). In addition, if you would like to visit the Taxes FAQ (Frequently Asked Questions) area, click on http://www.fool.com/school/taxes/taxes.htm and you'll be right at the home page. Pay special attention to the "archives" section. Check it out. Finally, if you need to get to the IRS web site, click on http://www.irs.ustreas.gov to go directly there.
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