Under the law, all of your traditional IRAs are treaded as one large IRA account for the purpose of calculating the taxable amount of any regular IRA distribution. You are not being penalized for any portion of your 2017 distribution. It's simply the case that a larger portion of the distribution is taxable than you thought because less of your basis in nondeductible traditional IRA contributions than you thought is applicable to this distribution.
You are not forfeiting any portion of your basis that is not permitted to be applied to your 2017 distribution. Any portion that cannot be applied to your 2017 traditional IRA distributions remains with your IRAs in aggregate to be reduce to the taxable amounts of future IRA distributions. You'll always have some basis in nondeductible traditional IRA contributions until you have a zero balance in all of your traditional IRA accounts at year end.
