Thank you so much for your answer. I hadn't considered that the basis deduction was included in the federal AGI. It also looks like the correct amount for the IRA distribution is included on page 2 of the retirement income exclusion worksheet. But I don't quite understand why line 7a of the Income and Retirement Worksheets includes the $4000 credit for the disallowed contributions in 1985 & 1986 as well as being shown on line 7d. Since the total appears to be correct, I guess I should just not worry about it!
Again, I very much appreciate your explanation. It's very, very helpful!
