Good point regarding the instructions for Form 8606 saying that you must file the form under these circumstances. Despite many requests for this capability over the years, it seems Intuit has made the corporate decision not to provide the capability for generate a Form 8606 for a distribution from an inherited IRA.
Although I believe that there is at least one competing tax program that supports the capability for generate a Form 8606 for a distribution from an inherited IRA, I'm not sure that the IRS e-file specification supports filing such a form, so it might be the case that you have to paper-file no matter what software you use. Even the Form 8606 itself lacks instructions for identifying the form as applying to an inherited IRA, so you need to make a notation at the top of the form to indicate that, something that I suspect has no way to be included in an e-filing.
