You pay taxes on the value of the stocks you transfer to the ROTH the day the broker makes the conversion.

Say you have $100K in CTIX today  (40,000 shares @ 2.50) and CTIX gets bought out in 18 months for $100/ share.

You convert today @ whatever it closes at - say $2/share so you have to pay 2012 taxes on $80K.  You then get to take out the 40,000 x $100 =  $4,000,000 TAX FREE.  Thus, you paid taxes on $80K versus $4MM on your investment.

IN MOST CASES, it is better to convert IRA to ROTH IRA rather than buying new stock.  This may not be true w/ CTIX because the future growth of newly bought shares is so great in CTIX and in most normal stocks it is only a small multiple at best.

I will be putting in $12K 1/2/13 to my wife and my ROTH's and that will conclude my CTIX purchases.  I will then have about a 50/50 split in a regular stock acct that will be fully taxed at long term holding rates and a fully tax free ROTH acct.

A ROTH must have been opened for at least 5 years before you can take funds from it without a penalty.  If you open one today, it counts as being opened 1 jan 2012.  You can withdraw your deposits from a ROTH within 5 years at no penalty but you cannot withdraw earnings before 5 years without a penalty.  Just found that out today.  Pretty sure ROTH also has the withdrawal requirements starting at 70 1/2 or you pay massive fines.