If entered correctly then TurboTax will calculate the taxable amount on Form 8606. If you have a * next to line 13 on Form 8606 then TurboTax is using the Taxable IRA Distribution Worksheet to calculate the nontaxable portion according to Publication 590-B.
Please note, if you have earnings or other pre-tax funds in your Traditional/SEP/SIMPLE IRAs the part of the conversion will be taxable according to the pro-rata rule.
Code 2 is correct.
Form 1099-R instructions state: "Reporting Roth IRA conversions. You must report a traditional, SEP, or SIMPLE IRA distribution that you know is converted this year to a Roth IRA in boxes 1 and 2a (checking box 2b “Taxable amount not determined” unless otherwise directed elsewhere in these instructions), even if the conversion is a trustee-to-trustee transfer or is with the same trustee. Enter Code 2 or 7 in box 7 depending on the participant's age."
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