From what I have seen, TT seems to treat the Roth conversion as a taxable withdrawal and then offset it with an IRA deduction. That seems backwards to me as well ... like you I would think that it should be a non-deductible contribution to the traditional IRA followed by a Roth conversion withdrawal of the traditional IRA balance that had an offsetting tax basis because of the non-deductible contribution.
I would like to hear from a TurboTax employee or tax CPA explaining how it should work and why.
