I converted a Traditional IRA to a Roth. The conversion was a stock equity with a cost basis of $19,000 in the Traditional IRA. The day of conversion, the value was $34,000. Which amount should the brokerage house use for the 1099-R?

Assets in IRAs do not carry a cost basis for tax purposes. Therefore, distributions and Roth conversions are taxed at the value of the assets based on their value at the close of business on the day the transaction is processed. In your example, the 1099-R should show an amount of $34,000.

(To learn more about Roth IRA conversions, check out Did Your Roth IRA Conversion Pass or Fail?, Recharacterizing Your IRA Contribution or Roth Conversion and Roth IRAs Tutorial.)


This question was answered by Denise Appleby
(Contact Denise)

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