Retirement tax questions

There should be no 1099-R for a trustee-to-trustee transfer, which is the only type of tax-free transfer allowed for a non-spouse beneficiary.  A 1099-R is issued when there is an indirect rollover, which is not allowed for an Inherited IRA. 

That is what the concern is expressed above - that the transfer may have been handled improperly, thereby making the transaction taxable.

The fact that you have a 1099-R at all indicates that something was not handled properly.   

Either the 1099-R was issued in error, or the transfer was not handled properly.  One of these must be the case, as the presence of a 1099-R indicates this has to be true.  

You cannot receive the funds and then deposit them into an Inherited IRA.  They must be transferred directly from the Decedent's IRA to the Inherited IRA in order to qualify as a tax-free transfer.  If at any time the funds were in your possession, you have a distribution that was 100% taxable.  Trustee-to-trustee transfers do not generate a 1099-R..

A proper non-taxable transfer for a non-spouse beneficiary

1. Must have been handled in such a manner that the funds were paid by the original financial institution directly to the bank that holds the CD.
2. Must have been paid payable to the bank as trustee for the Inherited IRA titled as such.  For example they check or wire would have been payable to "Bank X, FBO of Jane Do, Beneficiary Inherited IRA of John Doe, Deceased" (or similar).
3. No 1099-R is issued.

In any other type of IRA transaction, a 1099-R can be generated and the taxpayer can deposit it within 60 days and indicate that it was rolled over.  This is an indirect rollover.   This is expressly prohibited for Inherited IRAs.  While rollovers and transfers seem and sound similar, they are quite different.  Rollovers are not permitted for Inherited IRAs.  Only transfers are allowed.  

In your case, you must work to determine which thing is incorrect - the issuance of the 1099-R or the way that the funds were handled.  If the were rolled over and not transferred you cannot treat this as a tax-free transaction, and you have a prohibited transaction (even though the funds may be in an Inherited IRA now) and a taxable distribution.