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I consider myself a reasonably intelligent person, but for some reason I'm really struggling with my taxes this year. My difficulty occurs with forms 8606 (IRAs) and 5329 (penalties), if applicable.

Here's my situtation (numbers rounded for simplicity):

In 1998, I had about $11,000 in an IRA that was rolled over from a 401(k) after leaving an employer. During that year, I converted about $6600 into a ROTH IRA and elected to spread the income over 4 years.

In 1998, I completed a form 8606 and included 1/4 of the $6600 as income. In 1999, I had no events which
required the filing of form 8606 (no contributions or distributions) so I just claimed another 1/4 on my 1040A.

I have never made any contributions to either IRA since I left my former employer, preferring instead to invest through my new 401(k).

In 2000, I withdrew the entire balance of my traditional IRA (about $4709) and another $5300 from the Roth to purchase my first home. I only intended to withdraw $10,000, but ended up with a little more due to fluctuations in value between the time I requested the exchange and when it actually occurred.

My problem is in determing my "basis" in each of the IRAs. I'm assuming my basis in the traditional IRA is $0. I've read conflicting information in the form instructions. At one point it seemd my basis in the Roth is $6600, but I'm not confident in that.

Is the $4709 from the traditional IRA taxable? Subject to penalty?

Is the $5300 from the Roth taxable? Subject to penalty? (I did not meet the 5-year rule)

What about the extra $9 over the $10,000 maximum for 1st time home purchase?

Any advice appreciated,

Vic
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