The only way that you can gift money from your IRA to another person's IRA is to take a taxable distribution from your IRA to obtain the cash, then for the other person to make an IRA contribution (which you deposit on the other person's behalf. So yes, the distribution from your IRA adds to your taxable income on which your tax liability is determined.
The maximum permissible IRA contribution is less than the annual gift tax exclusion, so in the absence of any other gifts you make to that person that would put the total, including the gifted IRA contribution, over the annual gift tax exclusion limit.
The other person must report enter the IRA contribution into TurboTax as if they had deposited the contribution themselves. The result is the same as if you took a cash distribution from your IRA (incurring whatever tax liability results from the distribution), giving the cash to the other person and letting them deposit their IRA contribution.
