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[[1. I remove the $1300 in contributions plus its gains from the traditional IRA, using the procedure
you outlined.

2. I keep the gains and pay tax on them.]]

Stop right here. I don't remember the first post, it sounds like you are heading down the wrong path here. With ANY regular IRA, there is no way to simply "carve out" the original contributions and earnings and segregare them from the remainder of the IRA. This is true with a deductible or non-deductible IRA. The entire IRA is considered one entire IRA. So all of the information is common to all of the earnings, etc.

[[ I hope that's a better explanation.]]

Sorry...not really. I just can't figure out what you are trying to accomplish. In the meantime, you should really read IRS Publication 590. That'll tell you how you must treat your IRA distributions, how they must be allocated, and how you must treat the IRA as homogenious.

Once you have had the chance to read Pub 590, come on back, start all over (from the beginning), be clear, and I'll try to help.

TMF Taxes
Roy
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