TurboTax does not permit reporting any Roth conversion from an inherited traditional IRA (code 4 in box 7 with the IRA/SEP/SIMPLE box marked).
While in the tax code it appears pretty clear that a spouse beneficiary is permitted to convert an inherited traditional IRA to their own Roth IRA, it's not so clear that the spouse beneficiary is permitted to convert an inherited IRA to an inherited Roth IRA. The only reason to convert to an inherited IRA instead of to their own IRA would be for a spouse beneficiary who is under age 59½ to be able to take a distribution of converted funds from the inherited Roth IRA before the 5-year conversion holding period has been completed. However, RMDs will be required to be taken from the inherited Roth IRA. The year in which RMDs must begin will depend on the age of the deceased spouse.
Assuming that a conversion to an inherited Roth IRA is permitted, to be reported on a Form 8606 the conversion would have to be reported on a Form 8606 of the inherited account separate from your own Form 8606. Nothing about the inherited Roth IRA combines with your own Roth IRAs unless you assume ownership of the inherited IRA, making it your own. This Form 1099-R would have to be prepared outside of TurboTax and mailed with your tax return. As long as you not indicate to TurboTax that you did not put the money into your own IRA (meaning a traditional IRA), TurboTax treats a code-4 distribution as taxable, so at least the amount on Form 1040 line 4b will be correct.
Finally, you'll want to be sure that the inherited Roth IRA really is an inherited Roth IRA, titled in the name of your deceased spouse as decedent for your benefit as beneficiary. If it's titled in just your name, it's not an inherited Roth IRA but is instead your own Roth IRA. Even if the conversion was to your own Roth IRA, the conversion would still be reportable on a Form 8606 separate from your own which must be prepared outside of TurboTax and mailed, the same as if the conversion was to an inherited Roth IRA.
