| Recharacterization of Roth to Traditional IRA.
No, you are not required to add back $500, and the recharacterization will move to the traditional IRA as current value of $3,500, with a basis of $4,000.
I am not sure why you recharacterized your Roth IRA?? I hope you did the proper calculation to determine whether or not it was prudent to do so, consulting a tax adviser is very important to determine whether this strategy is beneficial to you in the long term! | 
