How do I report a Roth conversion valuation discount strategy?

Did you receive a 2023 Form 1099-R for the conversion?

Yes, I did receive a 1099-R with the taxable amount not determined. I also have letters showing the discounted valuation from the Blocker Corporations (property development) that the conversion was made into. I was told that the taxable amount should be less than than the full amount because of the discounted valuations. 

To clarify, is the amount in box 1 already valued at the discounted value? 

 

If yes, then all you will have to do is enter Form 1099-R and indicate the amount converted:

 

1. Click "Federal Taxes" on the top and select "Wages & Income"
2. Click "I'll choose what to work on"
3. Scroll down and click "Start" next to "IRA, 401(k), Pension Plan (1099-R)" 
4. Answer "Yes" to the question "Did You Have Any of These Types of Income?"
5. Click "I'll Type it Myself"
6. Choose "Form 1099-R, Withdrawal of Money from 401(k) Retirement Plans, Pensions, IRAs, etc."
7. Click "Continue" and enter the information from your 1099-R
8. Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
9. Then choose “I did a combination of rolling over, converting, or cashing out money.” and enter the amount next to "Amount converted to a Roth IRA account"
10. On the "Your 1099-R Entries" screen click "continue"
11. Answer "yes" to "Any nondeductible Contribution to your IRA?" if you had any nondeductible contributions in prior years.
12. Answer the questions about the basis from line 14 of your 2022 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

 

 

It seems the lower value should have been reported on your Form 1099-R:  Discounts On Strategic Roth IRA Conversions and Cutting Edge Roth IRA Conversion Strategies

Hello and thank you for responding!

 

Actually the discounted amount is not on the 1099-R. I have separate papers showing the discounted valuation done by a different entity. 

Thanks!

 

Then enter that amount into the taxable amount for your 1099-R.  Save all of that documentation in case there is a question down the road.

 

@butlerbd21