I'm not familiar with the reporting of traditional IRA distributions on NJ tax returns, except that NJ does not allow a deduction for IRA contributions so any IRA distribution reported on a NJ tax return involves a basis calculation.
<a rel="nofollow" target="_blank" href="
https://www.state.nj.us/treasury/taxation/pdf/pubs/tgi-ee/git2.pdf">https://www.state.nj.us/treasury...>
If this was your only money in traditional IRAs in 2018, the fact that the traditional IRA was valued at only $5,237 due to investment losses and therefore the conversion was less than the $5,500 contributed means that the conversion should be nontaxable on both your federal and NJ tax returns (assuming that the resulting $5,500 traditional IRA contribution was reported as nondeductible on your federal tax return).
