A Form 1099-R for a distribution from a inherited traditional IRA is required to have the gross amount in box 1, the same amount in box 2a, box 2b Taxable amount not determined marked, code 4 in box 7 and the IRA/SEP/SIMPLE box marked. You must enter the Form 1099-R exactly as received. If your dad had no basis in nondeductible traditional IRA contributions, the entire amount is includible in your AGI.
The estate tax deduction for IRD is taken on Schedule A line 16. (For an estate tax deduction of 45% of the IRD, your dad must have died before 2010 when the maximum estate tax rate was at least 45%.) In TurboTax, go to Deductions & Credits -> Other Deductions and Credits -> Other Deductible Expenses. Continue to the page titled Did you have any of these other expenses? and click Yes. In the box labeled Estate tax deduction not reported on an estate K-1, enter 45% of the taxable amount of the IRA distribution (45% of the entire distribution if there is no basis in nondeductible traditional IRA contributions).
If your itemized deductions are less then the standard deduction, you cannot realize this deduction.
