A Roth conversion adds the converted amount to your ordinary income. Both strategies below generate deductions — in the same tax year — that offset that income. They aren't loopholes; they're incentives written into the tax code that high-net-worth families have used for decades.
The tax code rewards specific activities — energy production and real estate investment among them — with deductions available to anyone who qualifies. Pairing one of those deductions with the year you convert is what turns a six-figure conversion tax into something close to zero.
Investing in an oil & gas working interest the same year you convert generates large first-year deductions. Intangible drilling costs are treated as ordinary losses that net directly against the conversion income on your return.
Holding leveraged real estate inside a self-directed IRA lets you convert when the IRA's equity is at its lowest — so the taxable amount is small — then let future appreciation grow permanently tax-free inside the Roth.
Run your balance through the calculator to see your conversion tax and the gap to close — then get the downloadable Excel version and our guides.