This is correct behavior. Until you enter the year-end value of your traditional IRAs, TurboTax is unable to calculate the correct nontaxable amount of your traditional IRA distributions and calculates an incorrectly high nontaxable amount on Form 8606 by assuming that the year-end value is zero. Once you provide TurboTax with the correct information, TurboTax recalculates the nontaxable portion to the correct lower amount, properly increasing the taxable amount.
