When converting a Traditional IRA to Roth IRA, you have to determine the basis in all your traditional IRAs. You only have a basis if you made after tax (non deductible) contributions to an IRA. You have to consider all of your traditional IRAs as if they were a single combined IRA. So, if you have two traditional IRAs you combine the balances, and determine a combined basis. Let's say you have two Traditional IRAs. One is a 401(k) rollover that had all pre-tax contributions that you rolled over to an IRA - it had a year-end balance of $100,000. Your second IRA is one that has a combination of pre-tax and after tax contributions. The amount of the after tax contributions is $25,000, and balance at year end was $50,000. Your basis in your combined balance of $150,000 is $25,000. You then covert your $50,000 IRA to a Roth IRA. The amount that is pretax and taxable is $41,500, not $25,000. Your total pretax balance is $125,000, which is 83% of the $150,000 total. So any amount you convert from either IRA is going to result in 83% of it being taxed as ordinary income.
If you had after tax contributions to a Traditional IRA, you should have reported those each year on Form 8606 with your tax return. It notifies the IRS that you have after tax contributions, and serves as a record for you to track the basis in your IRAs.
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