Taxpayer has been contributing to a traditional IRA for a number of years but his income has been high so that it's been all non-deductible contributions. He wants to convert it to a Roth in 2010. I know that you have pay taxes on the gains associated with any assets you convert, but is it possible to take losses if those assets have declined in value (or more likely is his cost of conversion zero)?

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Yes, it is possible if the entire IRA is converted. The loss would be the basis shown on Form 8606 less the amount of the conversion. With no gain, none of the conversion would be taxable either. The loss would be a misc itemized deduction subject to 2% of AGI. Likely not possible if there are any SEP or SIMPLE IRAs, because the conversion would have to eliminate these also.

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