2010 Roth Conversion

[abp]

I have a client that is converting from a traditional IRA to a Roth this year - She invested 80,000 into a a traditional IRA set up through a stock broker now when she is closing it and converting it to a Roth IRA there is only 60,000.
Is the 80,000 taxed and then the loss taken on schedule C? Or is the 60,000 taxed and nothing done with the loss?

I searched but cannot find a clear answer.

Thank you for any input.

[BOB W]

I have a client that is converting from a traditional IRA to a Roth this year - She invested 80,000 into a a traditional IRA set up through a stock broker now when she is closing it and converting it to a Roth IRA there is only 60,000.
Is the 80,000 taxed and then the loss taken on schedule C? Or is the 60,000 taxed and nothing done with the loss?

I searched but cannot find a clear answer.

Thank you for any input.

She pays taxes on the $60,000 over 2 years. The $20,000 loss is only deductible if she has "Basis" in the IRA, like non deductible contributions. But, she must have basis to take a Schedule A misc subject to 2%.

Here is a Google search: http://taxes.about.com/od/retirement...t/IRA_loss.htm

[abp]

Thank you - now that I think it through it makes sense - it was not included in income so in effect you have already taken the loss when reporting only 60000.