In computing the $100,000 MAGI limit to convert an IRA to a Roth IRA is the passive activity losses that I had included or not. For example I have wages of $105,000 and Capital Gains of $60,000. Total income of $165,000. I also have passive activity losses of $70,000. Is my MAGI for the conversion limit $95,000? Therefore, I can convert.

In your case you would look to see what your AGI would be on the tax return, if you did not do a conversion. If that is $100K or less, you can convert. In your example, you don't state whether the passive loss is deductible for some reason, or suspended. If suspended, you cannot convert to a Roth.

Barry

For income tax calculation the passive losses are suspended from past years. However, I was trying to understand if suspended passive losses for income taxes were allow for calculating the MAGI for IRA to Roth conversion. What are the "modifications" that are allow to AGI other than the amount of the conversion?

The other modifications have nothing to do with passive losses that are suspended.

The area where the passive rules would come into play involve active real estate where the taxpayer could use the loss if there was no roth conversion, but loses the ability to deduct the loss currently once the roth income is added. In that case the AGI FOR CONVERSION PURPOSES ONLY includes the real estate loss that would have been allowed if the conversion had not been made.

Barry