Our AGI is between 98K and 118K, so I can do a partial deduction for my tIRA. In real life, I just wait until I do my taxes, calculate how much I can contribute, and then put that much in. However, that's too easy and doesn't scratch the itch for learning about tax laws.
So suppose I just put the full 5500 in there and then plan to recharacterize when taxes roll around (let's assume I can deduct half). If my 2017 contribution of $5500 is made in April, 2017, and I put it into some fund that returns 10% by April, 2018, how are those gains figured into my recharacterization?
For instance, do I just pay income taxes on half of the gains and then move ($2250+$112.50-$taxes) to the Roth? Is the recharacterization a taxable event? That is, do I have to pay capital gains taxes on it in addition to income tax?
Does the amount of cash I have laying around in the IRA affect this? If I have 5500 cash, can I pretend that my new contribution went to the money market fund and that the old cash from last year bought the fund?
I actually did read through pub 590A before asking this but couldn't find anything about gains, although that's no guarantee that the answer isn't in there...