Hello.
I made a nondeductible $6000 contribution to a Traditional IRA for the first time and invested it, but then did a Roth conversion (I realize now I should have converted before investing).
At the time of conversion I had investment losses so the full conversion was only $5979. Now when I fill out Form 8606 of my tax return, I am left with $21 on line 14 ($6000-5979) even though there is really $0 remaining in the traditional IRA.
Am I stuck tracking this $21 basis forever or is there some way to cancel this out by noting the losses?
Thank you.
Since the miscellaneous deduction for unrecoverable basis has been suspended until 2026, yes, you still have $21 of basis in nondeductible traditional IRA contributions carrying forward that can be applied to some future distribution that you make from a traditional IRA should you ever make a deductible traditional IRA contribution or have investment gains in a traditional IRA in the future.
In 2026 when miscellaneous deductions subject to the 2% of AGI floor are reinstated, you might be able to claim a deduction of $21 on 2026 Schedule A.
Yes, just report the full conversion at $6000 even though there is a small loss.
@Zidane
[ Edited 02/18/22| 05:31 PM PST]
When you say “report the full version at $6000” which line of the 8606 are you referring to?
I apologize. I met to report the full conversion of $6000.
Thank you @DaveF1006. Will there be any issues if I report a $6000 conversion and it doesn’t match the $5979 listed on the 1099-R that is reported to the IRS?
when you convert the entire amount of your IRA ( as in a Backdoor Roth conversion) your basis should (has to) go to zero. You're entering something wrong.
Since the miscellaneous deduction for unrecoverable basis has been suspended until 2026, yes, you still have $21 of basis in nondeductible traditional IRA contributions carrying forward that can be applied to some future distribution that you make from a traditional IRA should you ever make a deductible traditional IRA contribution or have investment gains in a traditional IRA in the future.
In 2026 when miscellaneous deductions subject to the 2% of AGI floor are reinstated, you might be able to claim a deduction of $21 on 2026 Schedule A.
@fanfare The entire converted amount is less than the original contribution due to the investment losses, which is why the basis is not 0. I believe it has been entered correctly.