topic How do I report a Roth conversion valuation discount strategy? in Retirement tax questions

How do I report a Roth conversion valuation discount strategy?

butlerbd21 — Wed, 11 Feb 2026 09:16:10 GMT

Last year I completed an IRA to Roth IRA conversion into 2 blocker corporations. I have the discounted valuation on the two of them but how do I report these on my tax returns so that my conversion taxable amount is less?

Re: How do I report a Roth conversion valuation discount strategy?

RachelW33 — Wed, 10 Apr 2024 23:39:11 GMT

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

Re: How do I report a Roth conversion valuation discount strategy?

butlerbd21 — Thu, 11 Apr 2024 00:21:11 GMT

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.

Re: How do I report a Roth conversion valuation discount strategy?

DanaB27 — Tue, 16 Apr 2024 15:21:25 GMT

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:

Click "Federal Taxes" on the top and select "Wages & Income"
Click "I'll choose what to work on"
Scroll down and click "Start" next to "IRA, 401(k), Pension Plan (1099-R)"
Answer "Yes" to the question "Did You Have Any of These Types of Income?"
Click "I'll Type it Myself"
Choose "Form 1099-R, Withdrawal of Money from 401(k) Retirement Plans, Pensions, IRAs, etc."
Click "Continue" and enter the information from your 1099-R
Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
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"
On the "Your 1099-R Entries" screen click "continue"
Answer "yes" to "Any nondeductible Contribution to your IRA?" if you had any nondeductible contributions in prior years.
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

Re: How do I report a Roth conversion valuation discount strategy?

butlerbd21 — Tue, 16 Apr 2024 15:39:08 GMT

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!

Re: How do I report a Roth conversion valuation discount strategy?

RobertB4444 — Tue, 16 Apr 2024 21:27:29 GMT

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