Level 9
04-27-2021
03:27 PM
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What I did in similar situation is override the % on line 10 of part I of form 8606. You have to do this every year an amount is taken out of an inherited IRA, when client has basis in traditional IRA. I file these returns by themselves because you have to turn error checking off e-file because of the override.
It sounds like you know the amount desired on 1040, line 4b so just keep track of calculations in case ever questions. The % override has to be calculated based on existing traditional IRA 1/01 balances only. But the software wants to take the non-deductible amount against all IRA distributions. This also results in the correct carryover of non-deductible basis to next year with only one over-ride.