The recharacterization distribution is never taxable. Earnings that must be transferred to the traditional IRA simply become earnings in the traditional IRA which will be taxable when later distributed or converted.
There is no such thing as a nondeductible traditional IRA, only basis in nondeductible traditional IRA contributions that apply to all of your traditional IRAs in aggregate. The amount recharacterized becomes basis in nondeductible traditional IRA contributions and, as I said above, the earnings transferred along with the amount recharacterized become traditional IRA earnings. The code N or R Form 1099-R reporting the recharacterization reports the amount transferred, not the amount recharacterized, so you explanation statement required to be included with your tax return must provide the details as to how much was recharacterized and how much was earnings.
