TurboTax is incapable of preparing the Form 8606 used to calculate the taxable amount of a traditional IRA contribution from an inherited IRA. You'll have to do that calculation yourself on a Form 1099-R outside of TurboTax. Do not include any information on that form about your own IRAs; information about your own IRAs must be kept entirely separate from the information about the IRA inherited from your father. Once you have determined the taxable amount, during the entry of the code-4 Form1099-R and additionally indicating to TurboTax that it was a distribution from an inherited IRA, TurboTax will ask you to enter the taxable amount that you calculated outside of TurboTax.
The "K" in ox 7 indicates that the IRA contains assets that do not have a readily available Fair Market Value. This could complicate determining the amount that you must put on line 6 of the Form 8606 that you prepare outside of TurboTax.
