I have a 2007 nondeductible traditional IRA contribution of $5K. Can that be converted to a deductible contribution in a later year.

I received a letter from the IRS disallowing my 2015 IRA deduction. I had a 2007 nondeductible traditional IRA contribution of $5000; form 8606 generated. In 2015 Turbo Tax said I could convert $4370 of the $5000 to a traditional IRA contribution and it created a new 8606 for the difference of $730. I've re-ran TurboTax 2015 thinking I did something wrong but found no mistake. IRS says I can't convert. Who is wrong?