Yes, Wife's basis is the sum of Wife's and Husband's basis.
Yes, it's fine that Wife did not indicate that the account was inherited.
Wife now treating Husband's IRA as her own results in Husband's basis also becoming Wife's basis. After entering the Form 1099-R, click the continue button on the Your 1099-R entries page. Answer Yes when asked if Wife made any nondeductible traditional IRA contributions. Confirm the amount shown as Wife's basis carried over from 2015 Form 8606 line 14, then click the EasyGuide button on this page. Proceed to the page where Wife can mark the box indicating [Wife] inherited a traditional IRA from a spouse who died. Then enter the amount from line 14 of Husband's 2015 Form 8606. TurboTax will prompt for an explanation for Wife's adjustment to Wife's basis.
Wife indicates that all RMD requirements were met by answering the corresponding follow-up question with [Wife] received all the RMD for 2016.
