Any gains attributable to the $300,000 while in the Roth IRA are required to accompany the recharacterization of the $300,000. When you ask the custodian to recharacterize $300,000, the custodian will calculate the gains on the $300,000 and transfer the combined amount to the traditional IRA. For example, if the entire Roth IRA account saw 20% growth between the time the $300,000 was converted to the Roth IRA and the time of the recharacterization, to complete a recharacterization of $300,000 a total of $360,000 must be transferred to the traditional IRA.
When entering the recharacterization into TurboTax, you'll enter the Form 1099-R reporting the original Roth conversion, then in the follow up indicate that you recharacterized the entire $300,000. Separately, you enter a code N or code R Form 1099-R (depending on whether the recharacterization of the 2017 conversion occurred before or after the end of 2017). Along with all of this you'll be prompted to enter an explanation statement describing the conversion, recharacterization and the calculation of the gains that accompanied the amount recharacterized.
