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Something's wrong with something you entered for one (or both) of the 1098s, but I can't figure out exactly what it might be. Run Smart Check to see if TurboTax finds any errors in your tax return. Carefully review your entries for both 1098 forms, and your answers to all of the questions following the entry of each 1098. Read the questions carefully, and pay particular attention to the questions about which is the most recent 1098. The 1098 from Bank 2 would be the most recent. Are you using TurboTax Online or the desktop TurboTax software? If you are using the desktop software, don't make any entries about mortgage interest in forms mode. Use the Step-by-Step interview.  

Thank you very much!   I think I will go ahead and include a Form 8606 with my 2021 1040-X, since none was included with my original 2021 return (a mistake, I think).  On the Form 8606, I'll report the actual, correct IRA basis as I now, in 2025,  know it to be, which will be no change from the prior year (2020) amount.  I'll include with the 2021 Form 8606 an explanation that the $7,000 2021 excessive IRA contribution, nondeductible and not deducted on the original 2021 return, was correctively distributed back to me in 2025 when it was discovered, and is NOT being treated as an increase in my IRA basis as of 2021.    I understand that including such a 2021 Form 8606 with an explanation may not be necessary, but it will at least officially document the IRA basis as I believe it to be in this situation (and be an informative part of my 2021 Turbotax file & amended return).  I know to be careful in tracking my IRA basis year by year, especially when excessive contributions and corrective distributions are involved.  Hopefully, this sounds like a reasonable approach?     

if the CPA is correct about your basis being equal to the bank account and there being no other assets (even with zero tax basis), there would be no tax effect on the distribution. However, I would report it on schedule D.  A final corporate return needs to be filed, and it may raise certain questions with the IRS if these other forms are not filed. When a corporate liquidates it's supposed to file these forms: Form 966 (section 331 in your situation), Form 1096 with form 1099-Div (box 9)   see form 966 for the time to file https://www.irs.gov/pub/irs-pdf/f966.pdf      note that liquidation/final return ends any future filing requirements with the IRS, state laws determine what's required to terminate the corporation for legal purposes.        

Here's a link to a post from @ATinyDuck a few weeks ago on the same topic (I'm still catching up with all the chatter here on this topic...)   https://ttlc.intuit.com/community/taxes/discussion/re-what-is-hell-is-in[product key removed]ng-me-i-have-to-upgrade-to-win-11-i-don-t-want-that-pos-they/01/3698485/highlight/true#M1367815