The earnings required to be transferred with the recharacterization do not go on Form 8606 line 1. They are not part of the amount that was recharacterized. If you contributed $5,000 to a Roth IRA, it grew to $5,300, then recharacterized your entire contribution, $5,000, not $5,300, has been recharacterized. The amount required to be transferred to the traditional IRA, $5,300, is the sum of the $5,000 being recharacterized and the $300 of earnings. In this case, Form 8606 line 1 should show $5,000.
The Form 1099-R reports the amount transferred, not the amount recharacterized. In the case of a code N or R Form 1099-R that has a nonzero box 2a, one can infer that the amount in box 1 minus the amount in box 2a is the amount that was recharacterized.
