Can I convert this year?

[Guest JimSi]

I have an S Corp with basis of about $400,000, this Corporation has been my sole source of income for 30 years. I anticipate in possibly having losses this year in the S Corp of about $150,000. I also anticipate having W-2 income of about $60,000, and long term capital gains of about $125,000, interest income of about $10,000. Do I qualify to convert my IRA to a Roth?

[Ron Snyder]

You need to consult your own CPA who can run out the numbers, factor in your subjective view about future tax rates and give you an answer. Certain banks and brokerage firms will provide this "service" for free, since they want to sell you something. I would not place my tax decisions in the hands of unknown strangers who post on a bulletin board.

[John G]

S corp basis has no impact on the qualifications. Your W2, LTCG and interest put you above the threshold of 100k. Only if your flow through negative from your Sub S pulls you below 100k would you then qualify.... and it is not clear from what you wrote that you would report -150 from the sub S.

I highly agree that you seek advice from your accountant or tax advisor. You posed the question about eligibility of a Roth conversion - but you also need a second opinion on the advisability of conversion which gets into (current and future) tax rates, income, estate planning and other issues.