15% Tax Bracket

No, your thinking is wrong. The $67,900 number represents taxable income. I.e., Adjusted Gross income less your personal exemptions less your standard or itemized deduction. Your return of capital is not taxable as long as after adjusting your cost basis down for the return you don't go below zero cost basis.

Your $5000 of qualified dividends will be tax-free as long as your ordinary taxable income does not exceed $62900.

Therefore, add up your taxable gross income, subtract any adjustments, subtract personal exemptions and subtract either the standard deduction or itemized deductions. What is left is your taxable income before the Roth conversion. Subtract that amount from $67,900. The difference is how much you can convert and only pay 15% tax on the conversion and still pay no tax on the qualified dividends.

Mostly. Two things: a part of what shows as Return of Cap (MLPS)might actually be income when you get the K-1. So it may be low, but not zero.

You can convert more than you think you will want to convert, and recharacterize part back to fine tune after you know the real numbers. Gains or losses on the recharacterized amount are apportioned pro rata to the part that gets unconverted (recharacterized) and the part that stays converted.

So for example, you convert 50,000, the converted account rises to

60,000 at the time of recharacterization, you unconvert half back, you will move $30,000 back to the conventional IRA, and pay taxes on $25,000 as the converted amount.

Thanks for the reply. I forgot one thing, I also have $5000 loss on a couple of stock sales, with no profitable sales to off set. I assume I can increase my conversion by $3000 and carry $2000 forward. Phil