OMB No. 1545-1007 Nondeductible IRAs

(Contributions, Distributions, and Basis) Form 8606

© Please see What Records Must I Keep? below. Department of the Treasury

Internal Revenue Service

Attachment

© Attach to Form 1040, Form 1040A, or Form 1040NR. Sequence No. 47

Name. If married, file a separate Form 8606 for each spouse who is required to file Form 8606. See instructions. Your social security number

Home address (number and street, or P.O. box if mail is not delivered to your home) Apt. no. Fill in Your Address Only

if You Are Filing This

Form by Itself and Not

With Your Tax Return

City, town or post office, state, and ZIP code

1

1 Enter your nondeductible IRA contributions for 1997, including those made during 1/1/98–4/15/98 that

were for 1997. See instructions

2 Enter your total IRA basis for 1996 and earlier years. See instructions 2

3 Add lines 1 and 2

4

3

Enter only those contributions included on line 1 that were made during 1/1/98–4/15/98. This amount

will be the same as line 1 if all of your nondeductible contributions for 1997 were made in 1998 by

4/15/98. See instructions

5

4

Subtract line 4 from line 3 5

6 Enter the total value of ALL your IRAs as of 12/31/97 plus any outstanding

rollovers. See instructions

7

7

Enter the total IRA distributions received during 1997. Do not include

amounts rolled over before 1/1/98. See instructions

8 8

9

Add lines 6 and 7

9

3 .

10

Divide line 5 by line 8 and enter the result as a decimal (rounded to two

places). Do not enter more than “1.00”

10 Multiply line 7 by line 9. This is the amount of your nontaxable distributions for 1997

11 11

12

Subtract line 10 from line 5. This is the basis in your IRA(s) as of 12/31/97

12

13

13

Add lines 4 and 11. This is your total IRA basis for 1997 and earlier years

Under penalties of perjury, I declare that I have examined this form, including accompanying attachments, and to the best of my

knowledge and belief, it is true, correct, and complete. Sign Here Only if You

Are Filing This Form

by Itself and Not With

Your Tax Return © Your signature © Date

General Instructions

Purpose of Form

Cat. No. 63966F Form 8606 (1997)

Did you receive

any IRA

distributions

(withdrawals)

in 1997?

No

Yes

Enter the amount from line 3 on

line 12. Then, stop and read When

and Where To File below.

Go to line 4.

Taxable Distributions for 1997

Subtract line 10 from line 7. Enter the result here and on Form 1040, line 15b; Form 1040A, line 10b;

or Form 1040NR, line 16b, whichever applies

©

©

6

Your basis is the total of all your

nondeductible IRA contributions minus the

total of all nontaxable IRA distributions

received. It is to your advantage to keep track

of your basis because it is used to figure the

nontaxable part of future distributions.

Use Form 8606 to:

Note: To figure your deductible IRA

contributions, see the Instructions for Form

1040, or Form 1040A, whichever applies.

Contributions, Nontaxable Distributions, and Basis

Section references are to the Internal

Revenue Code.

Who Must File

● You made nondeductible contributions to

your IRA for 1997, or

● You received IRA distributions in 1997 and

you have ever made nondeductible

contributions to any of your IRAs.

You must file Form 8606 if:

97

For Paperwork Reduction Act Notice, see back of form.

● Report your nondeductible IRA

contributions,

A Change To Note

Beginning in 1997, SIMPLE IRAs are available

to employees of small employers. Do not

include contributions to a SIMPLE IRA on line

1. However, if you received any IRA

distributions in 1997, you must include the

value of your SIMPLE IRA on line 6. ● Forms 1099-R and W-2P received for each

year you received a distribution.

● Forms 5498 or similar statements received

each year showing contributions you made.

● Forms 5498 or similar statements received

showing the value of your IRA(s) for each year

you received a distribution.

● Page 1 of Forms 1040 (or Forms 1040A,

1040NR, or 1040-T) filed for each year you

make a nondeductible contribution.

When and Where To File

Attach Form 8606 to your 1997 Form 1040,

1040A, or 1040NR.

If you are required to file Form 8606 but

you are not required to file an income tax

return, you still must file Form 8606. Send it

to the Internal Revenue Service at the same

time and place you would otherwise file Form

1040, 1040A, or 1040NR.

● Figure the basis in your IRA(s), and

● Figure the taxable part of any distributions

you received in 1997 if you have ever made

nondeductible contributions.

What Records Must I Keep?

To verify the nontaxable part of distributions

from your IRA, keep a copy of this form

together with copies of the following forms

and records until all distributions are made

from your IRA(s):

(99)
Form 8606 (1997) Page 2

Example. You made contributions of $1,000

in 1997 and $1,000 in 1998 of which $1,500

are deductible and $500 are nondeductible.

You choose $500 of your contribution in 1997

to be nondeductible. In this case, the $500

would be entered on line 1, but not on line 4,

and would become part of your basis for

1997.

Line 5

Additional Information

If none of your contributions are

deductible, you may choose to make

nondeductible contributions up to $2,000 (but

not more than your earned income). If you are

married filing a joint return and your earned

income is less than your spouse’s, your

nondeductible contributions cannot be more

than the total of your and your spouse’s

earned income. Enter on line 1 of Form 8606

your contributions that you choose to make

nondeductible.

Line 6

Amending Form 8606 Line 7

Specific Instructions

Caution: If you received an IRA distribution in

1997 and you also made IRA contributions for

1997 that may not be fully deductible

because of the income limits, you need to

make a special computation before

completing this form. For details, including

how to complete Form 8606, see Tax

Treatment of Distributions in Chapter 5 of

Pub. 590.

Name and Social Security Number

Line 1

Line 2

Line 11

Line 4

Penalty for Overstatement

Penalty for Not Filing

If you are required to file Form 8606 but do

not do so, you will have to pay a $50 penalty

for each failure to file this form unless you

can show reasonable cause.

If you overstate your nondeductible

contributions for any tax year, you must pay a

$100 penalty for each overstatement unless it

was due to reasonable cause.

For more details on nondeductible

contributions, IRA basis, and distributions,

see Pub. 590, Individual Retirement

Arrangements (IRAs).

After you file your return, you may change a

nondeductible contribution made on a prior

year’s return to a deductible contribution or

vice versa. To do this, complete a new Form

8606 showing the revised information and

attach it to Form 1040X, Amended U.S.

Individual Income Tax Return. Send both of

these forms to the Internal Revenue Service

Center for your area as shown in the Form

1040X instructions.

If you file a joint return on Form 1040 or Form

1040A, enter the name and social security

number of the spouse whose IRA information

is shown.

● Distributions received in 1997 and rolled

over to another IRA by 12/31/97,

● Outstanding rollovers included on line 6,

● Contributions under section 408(d)(4)

returned to you on or before the due date of

the return, or

● Excess contributions under section

408(d)(5) returned to you after the due date of

the return. If this is the first year you are required to file

Form 8606, enter zero. Otherwise, use the

chart below to find the amount to enter on

line 2.

If you made contributions in 1997 and 1998

that are for 1997, you may choose to apply

the contributions made in 1997 first to

nondeductible contributions and then to

deductible contributions, or vice versa. But

the amount on line 1 minus the amount on

line 4 cannot be more than the IRA

contributions you actually made in 1997.

Although the 1997 IRA contributions you

made during 1/1/98–4/15/98 (line 4) can be

treated as nondeductible for purposes of line

1, they are not included in your basis for

purposes of figuring the nontaxable part of

any distributions you received in 1997. This is

why you subtract line 4 from line 3.

Enter the total value of ALL your IRAs

(including SIMPLE IRAs) as of 12/31/97 plus

any outstanding rollovers. You should receive

a statement by 2/2/98 for each IRA account

showing the value on 12/31/97. A rollover is

a tax-free distribution from one IRA that is

contributed to another IRA. The rollover must

be completed within 60 days of receiving the

distribution from the first IRA. An outstanding

rollover is any amount distributed to you

from one IRA within 60 days of the end of

1997 (between Nov. 2 and Dec. 31) that you

did not roll over to another IRA by 12/31/97,

but that you roll over to another IRA in 1998

within the normal 60-day rollover period.

Do not include on line 7:

This is the total of your nondeductible IRA

contributions made in 1997 and earlier years

minus the total of any nontaxable IRA

distributions received in those years.

Line 12

This amount will be used on Form 8606 in

future years if you make nondeductible IRA

contributions or receive distributions.

This is the total of your IRA basis as of

12/31/97 and any nondeductible IRA

contributions for 1997 that you made in 1998

by 4/15/98.

If you used the IRA Deduction Worksheet

in the Form 1040 instructions, follow these

instructions to figure the amount to include

on line 1 of Form 8606.

IF the last

Form 8606 you

filed was for. . . THEN enter on line 2. . .

1988

1987 Paperwork Reduction Act Notice. We ask

for the information on this form to carry out

the Internal Revenue laws of the United

States. You are required to give us the

information. We need it to ensure that you are

complying with these laws and to allow us to

figure and collect the right amount of tax.

The time needed to complete and file this

form will vary depending on individual

circumstances. The estimated average time

is: Recordkeeping, 26 min.; Learning about

the law or the form, 7 min.; Preparing the

form, 21 min.; and Copying, assembling,

and sending the form to the IRS, 20 min.

If you have comments concerning the

accuracy of these time estimates or

suggestions for making this form simpler, we

would be happy to hear from you. See the

instructions for the tax return with which this

form is filed.

You are not required to provide the

information requested on a form that is

subject to the Paperwork Reduction Act

unless the form displays a valid OMB control

number. Books or records relating to a form

or its instructions must be retained as long as

their contents may become material in the

administration of any Internal Revenue law.

Generally, tax returns and return information

are confidential, as required by section 6103.

A year after

1992

A year after

1988 but

before 1993

The amount from line 12 of

the last Form 8606 you filed

The amount from line 14 of

the last Form 8606 you filed

The total of the amounts on

lines 7 and 16 of that Form

8606

The total of the amounts on

lines 4 and 13 of that Form

8606

● Subtract the amount shown on line 10 of

the worksheet from the smaller of the

amount shown on line 8 or line 9 of that

worksheet. Enter on line 1 of Form 8606 the

part of the result that you choose to be

nondeductible.

● If you choose not to deduct the full amount

shown on line 10 of the worksheet, subtract

the amount you are deducting from the

amount on line 10. Enter the result on line 1

of Form 8606. You cannot take a deduction

for the part included on line 1.

● If you are married filing a joint return and

the amount on line 8 of the worksheet was

less than $4,000, enter on line 1 of Form

8606 any nondeductible contributions from

the appropriate lines of the IRA worksheet in

Pub. 590.

If you used the IRA Deduction Worksheet

in the Form 1040A instructions, follow these

instructions.

● Subtract the amount shown on line 8 of the

worksheet from the smaller of the amount

shown on line 6 or line 7 of that worksheet.

● If you choose not to deduct the full amount

shown on line 8 of the worksheet, subtract

the amount you are deducting from the

amount on line 8. Enter the result on line 1 of

Form 8606. You cannot take a deduction for

the part included on line 1.

● If you are married filing a joint return and

the amount on line 6 of the worksheet was

less than $4,000, enter on line 1 of Form

8606 any nondeductible contributions from

the appropriate lines of the IRA worksheet in

Pub. 590.

Enter on line 1 of Form 8606 the part of the

result that you choose to be nondeductible.