Inherited IRA - Who is the "Owner?" And what belongs on Line 6 and Line 7 of Form 8606?

[LK2023]

I have 3 Inherited Traditional IRAs - I am a designated beneficiary for all 3 - which came to me after my Mom's death in 2025.

I have a few questions but the first is, Who is the "Owner" for IRA 2?  I need to supply TurboTax this information when I enter the 1099-R. I also need it to determine how to complete the Form 8606 manually (see other questions below).

IRA 1 - This was my Mom's - Her Title was "Mom IRA R/O" - My Title is "Me BENE Mom DEC'D"

Mom clearly was the "Owner"

This IRA does have Basis

IRA 2 - This was originally Dad's Keogh, then Mom inherited it when Dad died in 2022, and now it is an IRA.

Her Title was "Mom BENE IRA Dad DEC'D"

For Mom, Dad clearly was the "Owner"

My Title is now "Me BENE IRA Dad DEC'D"

For me - Is Dad still the "Owner" or is Mom the Owner b/c I inherited it via her Beneficiary Designation?

This IRA has NO Basis.

IRA 3 - This was Dad's IRA which Mom inherited and treated as her own.

Her TItle was "Mom IRA R/O"

My Title is "Me BENE IRA Mom DEC'D"

I think that for me, Mom was the "Owner" b/c she was an eligible designated beneficiary as spouse, and treated the IRA as her own.

This IRA does have Basis.

I'm also now trying to complete Form 8606 manually b/c TurboTax does not handle this for Inherited IRAs.

The CPA who did my Mom's taxes combined the Basis for IRA 1 and IRA 3, the IRAs that were basically my "Mom's" once she inherited IRA 3 from my Dad.

However, the Form 8606 was completed basically a different way each of the 3 years it was done after my Dad died. The combinations of figures on Line 6 and Line 7 were different every year. 

I want to do it correctly! Especially if I have to do it manually, and whether I send in my whole 1040 by mail, or do fanfare's 1040-X method, someone at the IRS will be reviewing it. 

I did ask the CPA for guidance, but she basically just said, "I think they are all Traditional IRAs now," and "don't stress about it." Which did not clarify the correct figures to use for Line 6 and Line 7. It kind of  implies that I should just pro-rate the basis over all 3 IRAs. 

I have the Basis figure to use that originated from the basis numbers for IRA 1 and IRA 3 combined.

So my next questions, which center on how much of a role IRA 2 should have in Form 8606 (if any) because it is an Inherited Traditional IRA, but it may have a different "Owner" (Dad vs Mom), are as follows:

What goes on Line 6? Is this the 12/31/2025 Value of IRA 1 + IRA 3, or should it be all 3 Inherited IRAs?

What goes on Line 7? Is this the 2025 Distributions of IRA 1 + IRA 3, or should it be all 3 Inherited IRAs?

One approach used in the past was Line 6 = IRA 1 + IRA 3, and Line 7 = Distributions from IRA 1 + IRA 3, and my Mom's Inherited IRA 2 was not included.

Another variation was Line 6 = IRA 1 + IRA 3 and Line 7 = Distributions for all 3 Inherited IRAs.

If the "Owner" of IRA 2 is Dad, should it be excluded entirely from the Form 8606? Or is it included because it is also an Inherited Traditional IRA?

If I use IRA 1 + IRA 3 for both Line 6 and Line 7, or all 3 IRAs for both Line 6 and Line 7, the bottom line is the same b/c of the proportionality. But if Line 6 is just the two IRAs, and Line 7 is distributions from all 3, it increases the non-taxable portion. I would like to do it right! 

This is driving me nuts! I would love to get it nailed down. Any help would be greatly appreciated!

[RogerD1]

IRA 2 should be considered separately from IRA 1 & IRA 3 and should not factor in to the calculations on Form 8606.

I agree with your assessment about the original owners - IRA 1 & 3 would be your mom and IRA 2 would be your dad.  IRA 1 & 3 will be aggregated together and will be separate from IRA 2.  If it would make life simpler for you, IRA 1 & 3 could be combined into one IRA by doing a rollover of one to the other.

For purposes of the Form 8606, line 6 value of traditional IRAs should included only IRA 1 & IRA 3.  The line 7 distributions should only be IRA 1 & IRA 3 also.

Your IRA 2 needs to be considered separately from the other 2 IRAs and won't be reported on a Form 8606 individually since it doesn't have a basis.  It's distribution will be fully taxable.

Here is a TurboTax support article about Form 8606

[LK2023]

Beautiful answer RogerD1 - Thank you so much for your response and this succinct clarification.  I appreciate your prompt reply very much. I can complete Form 8606 with more confidence now, and adjust the 1099-Rs entries to show the Taxable amount calculated from the form now.  

[LK2023]

Thank you for the link to the piece with more information about Form 8606 and TurboTax.

If I have to paper mail my return because of a Form 8606 for Inherited IRAs, can I still utilized Audit Defense? And is there a point where I will be prompted about this?

I'm struggling with my NJ Return because when I adjust the Taxable amount on my 1099-Rs for the 2 relevant IRAs, those numbers are not flowing through to the NJ Return Line 20A, which is just showing the full Distribution amounts rather than the ones adjusted for the Form 8606. 

I'm not sure how to coordinate with the NJ Return to trigger it to complete Worksheet C correctly. Is there a way I can manually change the value of NJ Line 20A to reflect the basis adjustment?

I'm assuming I'm supposed to paper mail my NJ Return as well.

[RogerD1]

I had replied to a different post by you - now that I see this one, my memory was triggered as to your situation re: the 3 inherited IRAs.  Your situation is such that this is the first year that you withdrew from these inherited IRA accounts.  If your parents were New Jersey residents when they made contributions to those IRAs, their contributions were taxed by New Jersey in the year of contribution.  When funds are withdrawn from the IRA, only the amount of the IRA attributable to earnings will get taxed by New Jersey, while the amount of the withdrawal  attributable to the contribution will not be taxable by New Jersey.  When you go through the instructions below, compare the results that you get in TurboTax to what you would get from manually preparing the Worksheet Cs - one for your mom's IRA and one for your dad's IRA.   I'm going to repost the instructions from my earlier post here, modified for realizing that you have 3 inherited IRAs:

As you go through your NJ return, after Wage adjustments, you come to a screen IRA Distribution for You.  This screen will show the Gross distribution and the Federal taxable amount that you input after making your Form 8606 calculations.

1. Click Continue.  The next screen is IRA Information for You.  You will mark that Yes, this was the first year of withdrawal from this IRA.  You will then enter the total contributions that your parents made to the IRAs that were taxed by New Jersey when those contributions were made.  Then you will enter the total value of all of the IRA accounts.  There should not have been any contributions made by you to the inherited IRAs in 2026, so the bottom box is left blank.
2. The Retirement Exclusion Summary page will show the amount that TurboTax determined for the taxable amount and will also show if any of that taxable distribution is subject to an exclusion (if you are 62 years old or older).

If the amount of the contributions to the inherited IRA made by a New Jersey resident is high relative to the earnings, then very little of the IRA will be taxable to New Jersey.  Following the above steps should take care of getting the taxable amount of the inherited IRAs calculated correctly.

The following from the TurboTax Audit Support Center explains our audit support that is included in the cost of the return in addition to information from Audit Defense.  And yes, if you paper-file your return, you are able to purchase Audit Defense.  Prompts about Audit Defense sometimes pop up periodically while filing the return, but you will also have an opportunity to add it to your cart when you checkout.