First, an inherited Roth IRA from a spouse is not subject the the early distribution penalty so what you do with the distribution makes no difference. (You would not qualify for first home buyer anyway).
Second, If box 7 on the 1099-R is a "Q" then it is not subject to any tax at all. If box 7 is a"T" then if the Roth has not be in existence for 5 years then earnings might be taxable, but if 5 years or more, it would the the same as code "Q" and not taxable.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
