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I converted my traditional IRA into a Roth IRA in
December 1998. I did not make any further investments in the traditional IRA, nor did any further investments go into the Roth for the 1998 tax year. The
traditional was since closed out and the Roth will take
its place...

I was trying to figure out how to put the distribution
(trustee-to-trustee, in this case the same trustee) of
the funds onto the 1040 form using Form 8606. I started out by reading it and came to the conclusion that the first part of the form (Part I of 8606) didn't apply. So, I started filling in part II.

I entered the full transfer, say 5,000 as an example (Note: this amount will represent the market value at transfer)in line 14a. 14b was 0, 14c was the 5k again. Line 15 came to be 0 from my understanding. 16 came to the 5k amount again. 17 was 1/4 of this amount. And this amount (1,250) went into 1040 line 15b,
taxable amount. Here is my question:

I had contributed and deducted from my taxes the
traditional IRA for the prior years. However, I had NOT deducted the amount paid in in 1998. Thus, it appears I am not only getting no deduction from this amount, but then having to turn around and get taxed twice for it, once in my gross Wages, Salaries... and again when I put it in line 15b. I understand the notion of paying taxes upfront with the Roth and therefore not getting the deduction, but something is not right about paying
taxes twice, as the way I am doing it implies. Please
let me know what the CORRECT way to do this. This way CANNOT be right!

Should part I of the form be used in my case? The IRS said I needed to adjust my income on line 23 of 1040 by the amount contributed in tax year 98. But they did not say much else in their reply... I think part of the contribution to the old IRA might not be deductible either. They then followed by the general rules for converting to the Roth. Not very helpful.


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