If maintained as a inherited IRA rather than you, as spouse, taking the IRA as your own, the basis in the inherited IRA remains independent of your own and is not to be included on your own Form 8606. Instead, you would need to create a separate Form 8606 outside of TurboTax to calculate the taxable amount when taking distributions from the inherited IRA, then entering in place of the amount shown in box 2a on the original code-4 Form 1099-R the calculated taxable amount. You would then include the separately prepared Form 8606 (which you need to mark as being for the inherited IRA) with your mailed paper tax return.
If you have taken the IRA as your own, either by treating it as your own, transferring it to your own IRA or rolling it over to your own IRA, then the basis from the inherited IRA transfers to you. When the basis transfers to you, in TurboTax you must enter the amount as an adjustment to your own basis by clicking the EasyGuide button after indicating that you made nondeductible traditional IRA contributions and entering the amount as an amount of basis transferred from your deceased spouse.
