Input your 1099-R as you have it, in this section:
1. Click Federal on the left-hand side menu.
2. Click Income across the top.
3. Scroll down to Retirement Plans and Social Security and click Show more.
4. Click Start or Revisit by IRA, 401(k), Pension Plan Withdrawals (1099-R).
Put code T in box 7. That lets Turbo Tax know that it's not taxable. Click Continue after everything is input from your form.The next page asks if you inherited the IRA, and who from. Click Continue.
The next page asks if she opened the IRA before or after 2014. Select one, then click Continue.
Answer the questions till you get back to Your 1099-R Entries.
Answer the questions till you get back to Your income and expenses.
To double-check it's reported correctly:
1. Go to Tax Tools on the left-hand side.
2. Go to Tools.
3. Go to View Tax Summary.
4. Click Preview my 1040 from the left-hand side.
Line 4a should be the total inherited IRA, but it shouldn't be on line 4b.