I apologize, for this may have been covered ad nauseum in other threads, but I don’t know that I understand what is happening well enough to find matching threads with answers. But thanks for reading and considering a response! 🙂

For years now, I have been making nondeductible IRA contributions and then later converting them to Roth, as has been discussed all over the internet for a long time now. I’ve been using Form 8606 to track and report all of this. I’ve been diligent about using the prior year’s Line 14 to make an entry on the current year’s Line 2. And I use year-end statements and 1099-R from the broker to fill-in all of the other data needed.

I run it all through a spreadsheet or calculator, input the data, and consider it done until the next year. Until now, when for the first time that I can recall, I had a negative value for Line 14. That seemed odd, so I checked my spreadsheet for errors and used the calculator and, alas… it doesn’t seem to be a computational error.

I reviewed my prior year Form 8606 back to like 2016. I’ve been making nondeductible contributions since then, at least. For some tax years, I would complete a conversion (sometimes quickly after the initial contribution). Some years, I didn’t and waited until a subsequent year. In some years, I saw my “account value” appear to be below the value of the CD I held at year-end (because these brokered CDs apparently reflect real-time market value, even if I hold to maturity and never realize the loss). But the Forms 8606 since then seemed correct in my review.

I get that maybe Line 10 can introduce a little weirdness in that it includes rounding in the calculation. But here is what I had, prior to assuming negative values are zeroed in Form 8606 (sorry, the alignment seems to be a little off):

Line Value
1 6,500.00
2 0.07
3 6,500.07
4 0.00
5 6,500.07
6 0.00
7 0.00
8 6,500.32
9 6,500.32
10 1.000
11 6,500.32
12 0.00
13 6,500.32
14 -0.25
15a 0.00
15b 0.00
15c 0.00
16 6,500.32
17 6,500.32
18 0.00

Yes, Line 2 includes $0.07 basis from the prior year. But Line 10 rounds to 1.000, leaving me with a negative number on Line 14. I also see that if I don’t enforce the rounding to 3 digits and let the spreadsheet use the entire value as-is, the issue resolves itself and Line 14 drops to exactly 0. But I’m using the rules as I understand them… or so I thought.

Elsewhere on this forum, I’ve seen that negative values on this form just get set to 0. I’ve not seen that in the IRS instructions for Line 14 (but I may have missed it at this hour!). But let’s say I resolve the confusion on Line 14 and just set that to 0. But lines 16 and 17 are the same, based on all the calcs in Part 1. I realize we’re talking small gains (yes, the gain on interest was $0.32 for a week between contribution and conversion), but it was a gain nonetheless. I would have expected to report $0.32 for taxing purposes on Form 1040. But this says to report a zero.

Is that just another case of rounding as instructed giving me a $0.32 break in this case?