I fully understand the rules and the pro rata requirements. After a lot of number crunching what I have found is turbo tax deducts the previous year basis from the taxable amount early on. that is 100% of it.....I have to assume it assumes a new zero value for your combined traditional IRA's. That allows for a full non deductible basis conversion. When you enter you current value of your IRAs' it adds back in the new basis...it no longer allows the full conversion per the IRS rules....the difference is what is not taxed. IE the pro rata amount of the nondeductible IRA. That number makes sense and is indeed correct. It has to do with turbo tax and you need to follow it through conclusion, and yes it is correct. I stand by my explanation on pro rata. Conversion of 50% of your non deductible amount means you have to convert 50% of your deductible amount. The same stands on the 20% and 20%. If you want to convert all of your previous non deductible contributions...IE that which you already paid taxes on...you can. You just need to do it pro rata with ALL of your IRA deductible contributions...IE 100% of that also. Turbo tax even supplies a worksheet to show the calculation as I laid it out. I stand on the pro-rata discussion.
