8606 calculation help. In regards to deceased husbands RMD/Trad IRA, which is now treated as Wife's Trad IRA. Husband passed b4 RMD, wife took his and hers by end 2016.

[munda]

Wife received 1099-R, showing total of both RMD's.

2015 Return Cost Basis:

8606-T Husband- $7000

8606-S Wife- $4000

2016 8606-S form is using the $4000 as basis. Should it not use the total of both husband and wife?

Wife did not choose option for, if the 1099-R was inherited. Is this correct or no?

How to show Husbands RMD was met? Or is just saying yes it was, enough?

[dmertz · Accepted solution]

Yes, Wife's basis is the sum of Wife's and Husband's basis.

Yes, it's fine that Wife did not indicate that the account was inherited.

Wife now treating Husband's IRA as her own results in Husband's basis also becoming Wife's basis.  After entering the Form 1099-R, click the continue button on the Your 1099-R entries page.  Answer Yes when asked if Wife made any nondeductible traditional IRA contributions.  Confirm the amount shown as Wife's basis carried over from 2015 Form 8606 line 14, then click the EasyGuide button on this page.  Proceed to the page where Wife can mark the box indicating [Wife] inherited a traditional IRA from a spouse who died.  Then enter the amount from line 14 of Husband's 2015 Form 8606.  TurboTax will prompt for an explanation for Wife's adjustment to Wife's basis.

Wife indicates that all RMD requirements were met by answering the corresponding follow-up question with [Wife] received all the RMD for 2016.

[munda]

Thank you for your answer. A follow up question. Next year when she creates her own (new) return, what would be the cost basis? After doing your above guideline, where it says "Your basis for IRA 2016 and earlier.." in form view,  is equal to 0. So she would not have any next year, or would it be the total of the two cost basis?

[dmertz]

If Wife had a nonzero balance in traditional IRAs on December 31,2016, "your total basis in traditional IRAs for 2016 and earlier years" on Form 8606 line 14 cannot be zero.  It *must* be nonzero, but without knowing all of the numbers that go into preparing Form 8606, it's impossible to say how much basis remains.  This value being zero implies that the amount appearing on Form 8606 line 6 has not been entered correctly.

[munda]

Thank you. Form 8606 line 6 had no information. I entered the value of traditional ira as of December 31, 2016 in the corresponding IRA Info Worksheet. She does now have a cost basis. Thank you again. I hope that's all i needed for it to be correct.