What is the difference between a Roth IRA Recharacterization and a Roth Conversion?

A conversion is the process where you convert a traditional IRA to a Roth IRA.

A recharacterization is a method where a contribution made to one type of IRA is treated as having been made to different type of IRA. For example, if someone converts an IRA to a Roth, then later finds that they exceed the AGI limit for conversion eligibility (resulting in a "failed conversion"), they can recharacterize the Roth back to a Traditional IRA.
Recharacterization also comes in handy if you make a contribution to a Tradition IRA, then later find it's not deductible. Through rechacterization, you may be able to treat the contribution as made to a Roth IRA.

Hope this helps. If you need more information, look at IRS Pub. 590.

I opened a Roth IRA for 1999
and deposited $2000.
Now the account value is almost $0.
Is there anyway I can close this
account and deduct a $2000
loss for my tax return for year 1999?

Thanks for any help.
-Richard Sun
xsun@lucent.com

Sounds like some of the investments I've make in the past. You could likely close the account & withdraw the remaining balance. Since it is less than your basis, there's no gain on which to pay tax.

However, the loss isn't deductible. Capital gains & losses aren't available on IRAs & Roth IRAs. All income is reported as ordinary income.

Sorry. Hope this is of some benefit.