are you aware of the IRS pro-rata rule?
tax basis in IRAs $21
IRA value (all her IRAs) $84
Step 1: Calculate non-taxable portion of total Non-Roth IRA’s: Total after-tax contributions / Total Non-Roth IRA Balance = Non-Taxable %:
$21 / $84 = 25.00%
Step 2: Calculate the non-taxable amount by converting the result to Step 1 into dollars:
25.00% x $15 = $3.75
Step 3: Calculate the amount that will be added to your taxable income:
$15 – $3.75 = $11.25
see form 8606 where taxable and nontaxable portions are calculated
so it would seem that the value of your spouse's IRAs is more than her tax basis making a portion of the conversion taxable.
