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Greetings, Rebecca, and welcome. You asked:

<<My question is: Because of the conversion I'm sure I have to pay some taxes, but since the original $2000 was a gift, how much do I have to pay taxes on?>>

Well, if you deducted that original contribution when the gift was made, then the whole $3k you converted is taxable. OTOH, if you called that a nondeductible contribution and filed a Form 8606 with your income taxes that year, then the original $2K will be free of tax and you will only pay taxes on $1k of the amount converted.

When your dad made that gift you were required to show the contribution on your income tax return that year. So the taxes now depend on how you showed it, as a deductible or as a nondeductible IRA contribution.

Regards..Pixy
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