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Originally Posted by DoubleDown
Simple IRA conversion question that I can't find the answer to...
I contribute $100 into a traditional non deductible IRA and buy a stock. Over the years the stock price stays exactly the same but I reinvest $10 into the account through dividend reinvestment. Come 2010 and I want to convert this to a Roth IRA...what is my cost basis ($100 or $110)? Thanks.
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$100. Ideally you filed the Form 8606 with this number on it when you did your taxes that year.
You've already paid taxes on the $100, but you haven't paid taxes on the $10 of dividends.
Quote:
Originally Posted by Gotadimple
See your form 8606 for the basis. Assuming you have been filing that with your taxes over the years.
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I was advised once by a CPA about a Roth conversion: "Stop asking complicated questions for a few minutes and just plug through the Form 8606. Then you'll understand what they're asking you to do."