[SOLVED] I actually had a combination of problems. Most importantly, somehow the 1099R was imported and reused from the prior TT year incorrectly, and the distribution was marked "Inherited". That fixed a lot of problems.
However, to correct for the problem of unmatched years in a Backdoor Roth conversion, I had to do the following:
1. re-enter correct data for Form 8606 from the FIRST Tax year where there was an TradIRA EOY balance.
- F8606 Part II Line 18 will show the correct taxable amount for the partial Roth conversion
- This will flow to the correct "IRA Info Worksheet Part I-TradIRA Line 3, Basis carryover" for the next Tax Year.
2. copy the "IRA Info Worksheet Part I-TradIRA Line 3, Basis carryover" to Line 1 of the SAME worksheet for the next Tax year, and repeat.
- be careful to complete Form 8606 for each Tax year to get the correct Basis carryover for the next year
- when you reach the FINAL year when the TradIRA is now $0, all the TradIRA earnings (if any) show up as taxable
It wasn't easy to find or fix, but the errors were self inflicted. Kudos to TT for getting this use case correct.
