S corporations and second classes of stock. If you have disproportionate distributions, you have a second class of stock, right? No. Not necessarily. The IRS regulations specifically say that disproportionate distributions do not create a second class of stock, unless there is a contractual obligation to make those disproportionate distributions. IRA Conversions to a ROTH IRA The basic rules for 2010, essentially, are that anyone can convert. This is a change from prior Roth conversions, where you had to have an AGI of $100,000 or below. If you were above $100,000, there was no conversion. If you were married filing separately, there was no conversion. For this 2010 conversion, anybody can convert. If you convert, 50 percent of the amount converted will be taxable in 2011, and 50 percent will be taxable in 2012, unless the taxpayer elects otherwise. If an election is made, then the entire amount is taxed in 2010. The election not to defer the taxation must be made by the deadline for filing the tax return, plus extensions. Those are the basic rules. Another thing to keep in mind, however, is that these conversions can be unwound. If we decide, after we listen to this program today, wow that sounds really great. I am going to go out and convert my IRA. Immediately I convert, various circumstances occur, we get down to the wire, and it was not such a good idea. The whole transaction can be unwound by making another election. You have to unwind the conversion before the deadline for filing your tax return for 2010, plus extensions.
Remember; You do not roll; you just convert to the Roth or transfer it out.
Remember; You do not roll; you just convert to the Roth or transfer it out.
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