Because this distribution came from the IRA after your mother as the surviving spouse assumed the IRA, the IRA is no longer an inherited IRA. Do not mark the box labeled "I inherited this IRA." Unless your mother has basis in nondeductible traditional IRA contributions, the entire distribution is taxable.
(I have no idea why marking the "I inherited this IRA" box would make TurboTax think that the distribution is nontaxable as long as box 2a has the same amount as is in box 1, which should always be the case if the code in box 7 is 7 and the IRA/SEP/SIMPLE box is marked.)
