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I think I know the answer to my own question: since the traditional IRA comprised only fully-deductible contributions, and earnings, I therefore had no basis in it. If I had no basis, then I can't claim any loss. I just want someone who knows this stuff better than I do to confirm this for me. :)

You are correct. The loss reduces your taxable income from the conversion, because it reduces the amount converted, but there's no loss, per se, recognized on your return.

As a side note, the NAV has taken a plunge since I did the conversion, and now I have to pay tax on money that has since vanished. That pretty much sucks.

This you can fix. You can recharacterize the Roth back to traditional any time before 10/15/2001. This eliminates the year 2000 taxable income from the year 2000 conversion. If you do so, you must wait 30 days before again converting your traditional to Roth. You can read about this in the FAQ and in Publication 590.

Phil Marti
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