I'm guessing that this question was asked because some amount was withheld for taxes, otherwise the amount distributed from the traditional IRA would be the same as the amount converted to Roth. The entire amount that was distributed from traditional IRA in the process of performing the Roth conversion *is* taxable. If some was withheld for taxes, in additional to being subject to income tax, the portion withheld for tax may also be subject to an early distribution penalty. If the conversion was reported on a code 2 Form 1099-R, any amount withheld for taxes should have been reported as a separate distribution on a separate code 1 Form 1099-R, but some custodians mistakenly include the tax withholding on the code 2 Form 1099-R.
