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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121565  
Subject: Re: 1099-R Confusion!!! Date: 1/27/1999 8:53 AM
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[[In March 98, I converted all my mutual funds traditional IRAs to Roth
($10,974.67). ]]

Congrats...

[[In December I recharacterized one poorly performing mutual
fund account back to a traditional IRA and one week later reconverted back to
a Roth (capitalizing on the tax break loophole, new converted total should be
$9,822.64). I just received two 1099-R forms from my mutual fund company
and I'm totally confused!]]

I'm not surprised. It's going to be confusing for many people. And it'll mean MUCH MORE income for tax preparers this year.

[[ First 1099-R indicates a gross distribution and taxable
amount of $17,525.30 with a distribution code of 2. Second 1099-R indicates a
gross distribution of $6,519.99 with a taxable amount of 0. Distribution code of
G. What figures should I use on lines 15 and 16 on 1040 form and which figures
on my 8606.]]

That's part of the problem. The 1099R forms are going to be a BIG MESS. And without knowing EXACTLLY what transactions took place, I can't really help you complete the form. I would suggest that you go through and UNDERSTAND the underlying law with respect to the recharacteriaztion issues. You can read more about the recharacterization isues in one of my post in the Taxes FAQ area. I would suggest that you check it out.

But before you even GET to lines 15 and lines 16, you'll want to pay VERY CLOSE ATTENTION to Line 14b of Form 8606. If you understand the law, and the instructions for line 14b, you should be able to construct the proper amount to report as a recharacterization on line 14b, which will make the form work out.

[[ My calculations are that I should only have $2497.64 of taxable income to
include on line 15b of 1040. My turbo tax is giving me something completely
different. Thanks you any assistance you can provide.]]

Go the the IRS web site and get form 8606 and the instructions. Read 'em, and produce the Form 8606 by hand. Then you'll know how the form should work, and how it should look (again, pay particular attention to line 14b). Then you can goof around with Turbo Tax to make it come out right.

If you are comfortable with your answer, you now have the give Turbo Tax the information to complete the form correctly.

Hope this helps...
TMF Taxes
Roy

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