Is it possible to convert a portion of an IRA into a Roth IRA by using discounts from an oil/gas drilling program that provides an 80% income shield and will the proceeds from the investment become subject to UBTI? The income derives from the sale of the oil and gas produced by the drilling program and can be reinvested.

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I don't think members of this forum know enough details about your question to give a clear answer. Also, I for one am not an expert in this subject, but here is my opinion for what it is worth.

Of course it is possible to convert assets [dollar amounts] from a regular IRA to a Roth IRA with the fact that it is a taxable event.

I doubt that anything other than dollar amount assets would qualify [discount??]. If the IRA holds an investment in a oil/gas company that investment should be transferable to a Roth with the later income therefrom still being tax-free under the rules of a Roth IRA [exempt under code sec. 501(a)].

Unrelated Business Taxable Income (UBTI), is related to tax exempt organizations under code sec. 501, whereas an IRA is an entity under code sec. 401. Therefore, an IRA is not as such considered a tax exempt organization. I don't believe UBTI is relevant in your case even if the income is reported as UBTI.

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