Cryptocurrency gains and losses are treated as capital gains and losses. If after applying the carryover losses against capital gains you have losses left over, a maximum of $3,000 of the capital losses can be applied against ordinary income. Any losses remaining after applying $3,000 against ordinary income will continue to carry forward.
The taxable amount of a Roth conversion simply adds to ordinary income.
Your loss in crypto is a capital loss so only $3,000 of that loss can offset the ordinary income from your conversion.
Cryptocurrency gains and losses are treated as capital gains and losses. If after applying the carryover losses against capital gains you have losses left over, a maximum of $3,000 of the capital losses can be applied against ordinary income. Any losses remaining after applying $3,000 against ordinary income will continue to carry forward.
The taxable amount of a Roth conversion simply adds to ordinary income.