Thank you for your response, Critter-3. I did not report any tIRA earnings or dividends on my tax returns, but I do think I had a fundamental misunderstanding, so let me try and rephrase my question.
I goofed when making that $1000 deposit to my IRA. I deducted it when I shouldn't have. However, by deducting it, I have functionally made it a pre-tax contribution (even though it shouldn't have been). So I set myself up for double-taxation on that money.
When I wrote my initial question, I was concerned about co-mingling pre-tax and after-tax money in my tIRA, because of the more complicated accounting for distributions that occurs when that happens. However, I shouldn't be, because my deduction made my contribution pre-tax. So it's just all pre-tax money in there (assuming my parents' gift was pre-tax to begin with).
Please correct me if I'm wrong.
