Instructions for form 8696 say:
Treat any recharacterized IRA contribution as though the amount of the contribution was originally contributed to the second IRA, not the first IRA. For the recharacterization, you must transfer the amount of the original contribution plus any related earnings or less any related loss.
...Treat any earnings or loss that occurred in the first IRA as having occurred in the second IRA. You can’t deduct any loss that occurred while the funds were in the first IRA. Also, you can’t take a deduction for a contribution to a traditional IRA if you later recharacterize the amount.
2. You made a contribution to a Roth IRA and later recharacterized part or all of it in a trustee-to-trustee transfer to a traditional IRA. Report the nondeductible traditional IRA portion of the recharacterized contribution, if any, on Form 8606, Part I. Don’t report the Roth IRA contribution (whether or not you recharacterized all or part of it) on Form 8606. Attach a statement to your return explaining the recharacterization. If the recharacterization occurred in 2020, include the amount transferred from the Roth IRA on Form 1040, 1040-SR, or 1040-NR, line 4a. If the recharacterization occurred in 2021, report the amount transferred only in the attached statement, and not on your 2020 or 2021 tax return.
As your recharacterization occurred in 2021, line 4 should be $1,317, Remember that you shoiuld treat any earnings that occurred in the first IRA (Roth) as having occurred in the second IRA (Traditional).
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