Of course is will. You are not allowed to apply all of the basis if there is still an IRA in existence. That gives artificially low taxable amounts because the required data to do the calculation was not entered. For example assume a IRA that you took a $10,000 distribution, that had carry over basis of $9,000 and the year end value is $75,000. If you leave the year end value blank, (the same as zero), then the entire $9,000 basis will be applied to the $10,000 distribution and only the $1,000 would be taxable - leaving a zero basis to carry to next year. Doing that is not permitted. If the $75,000 year end value is properly entered then the $9,000 basis is prorated between the $9,000 distribution and the remaining IRA value. When that is done then 10.0588% of the $10,000 distribution ($1,059) is not taxable and $8,941 is taxable, leaving $7,941 of basis remaining to be applied to future distributions of the remaining $75,000 in the IRA. The difference of not entering the year end value in this example is $8,941 taxable income the correct way and $1,000 the wrong way. If entered the wrong way the IRS will find it and bill you for the missing $7,941 of taxable income not reported plus interest and penalizes. Plus it will mess up future distributions.
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