Retirement tax questions

Thank you @DianeW777  - this is helpful.

Although I'm left with the broader situation I was alluding to.

Forget the Inherited IRA for a second (I understand the guidance there), and consider I have a large Traditional IRA, mostly composed of rolled-over 401K.

SCENARIO for 2024

  - I've contributed $70K in MA to this Traditional IRA in prior years

  - I've rolled over $800K to this Traditional IRA in prior years

  - I withdraw $65K from this Traditional IRA in 2024

In that year, I would be able to exclude the the $65K from my taxable distribution for MA.  Great.

SCENARIO for 2025

  - I've contributed an additional $8K to this IRA in 2025

 -  I now withdraw $200K from this Traditional IRA in 2025

I am able to exclude the "remainder" ($70K-$65K) + new contribution of $8K = $13K from MA taxes, and this calc works (because Line D never reaches zero. So far so good.

SCENARIO for 2026

  - I've contribute an additional $8K to this IRA in 2026

  -I now withdraw $200K from this Traditional IRA in 2026

I "should" be able to exclude this new $8K contribution from MA taxes, but the calculation fails...  In fact, forever more, my new contributions are both taxed on earnings, and taxed on distribution because Line D grows and grows.... this feels quite wrong and not the intent.

In my CALC MODEL 2, I calculate Line D as I think intended... and do get the credit for new contributions so not double-taxed... I use "D (for 2025) = D + A - F (for 2024).  Effectively, it calculates how much untaxed  distributions were made, compares that to the contributions, and correct gives the deduction for that year...

Please see this Google Sheet (calculations are within), and image is shown here.

I don't see how to literally follow the schedule as written and not get double-taxed on this traditional IRA distributions in this case...