Re: Direct Conversion Request form for a Rollover IRA to Roth IRA conversion:
Want to pay the conversion taxes out-of-pocket & NOT from the Rollover IRA. It's correct to "elect not to have Federal income tax withheld", Right? Please someone who knows confirm for me & when is the estimated tax payments due to avoid penalty?
What should the effective date be?…..the date the form was completed, or is there some other date or strategy to consider. FYI, in case this matters:
• account was originally a 401k from a part-time job
• account consists of approx 0 cash, K in stocks–1 short-term & 1 long-term, both of which prefer to keep; and, 1 more small, long-term not sure to liquidate or not. Is it best to liquidate before or after conversion & why, or does it make a difference?
Can contributions to a Roth IRA be with Schedule B (interest income), C (profit from business), or D (cap gains) income? Account owner is not employed.
Any help is greatly appreciated! Thank YOU! 
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If you want to pay the taxes "out of pocket" from your conversion from a Rollover IRA to a Roth IRA, then you would elect NOT to withhold taxes at the time of the transaction. You will then be subject to pay those taxes once you file your federal return for the year in which the conversion takes place.
The IRS does not know actual dates as to when retirement plan transactions occurs, only the year. So the effective date is not of importance.
Contributions to ANY IRA plan can only be made with earned income (i.e. income reported on a W-2) and cannot be made with passive income such as interest, rental property, etc.
Also you cannot make contributions to ANY IRA if you are not employed or have no actual earned income. Unless you have a spouse who is employed and can make contributions on your behalf (AKA Spousal IRA)
Have you consulted with a tax preparer before deciding to make this conversion? As there are certain AGI limits in order to have a Roth IRA.
I only deal with cash funds, so I couldn't answer your question re: liquidation of stocks. Sorry.
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