In response to your most recent questions
Re: First dollars out are basis, and again for clarity, we are discussing the Massachusetts DOR assessment of taxes on withdrawals from an IRA:
"The amount of taxable IRA distributions for your Massachusetts tax return is the amount of conventional IRA distributions you received during 2018 minus any IRA plan contributions you made to the account, unless those IRA contributions have already reduced the amount of taxable IRA distributions on a previous tax return, and minus any qualified charitable IRA distributions you received in 2018 that are included in the distribution. "
To reiterate, Massachusetts takes the position that distributions from an IRA are first the contributions made that were already taxed by Massachusetts (the "basis") and only when exhausted are the remaining distributions deemed to have been from accumulated previously untaxed income.
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Hypothetical example is that exactly- a pastiche of financial data built up to answer various questions, and in fact the taxpayer's name was: Bobbie Maygun
I erroneously uploaded the complete hypo tax file which is unreadable but here instead is the PDF.
If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67
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