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@qbteachmt wrote:

From Pub 590-B:

"If you take distributions from both an inherited IRA and your IRA, and each has basis, you must complete separate Forms 8606 to determine the taxable and nontaxable portions of those distributions."

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And, the last time I looked into this, that will prevent you from e-filing because you can't have two taxpayer 8606 forms or two spouse 8606 forms in ProSeries, just one of each.

Great answers from the two folks above.

At this point it's fairly unlikely for someone to inherit an IRA with basis (certainly not impossible).  I have clients in their 50s & 60s with IRA basis so I anticipate this is going to be a much bigger problem 10-20 years down the road.  When you inherit an IRA, how do you know if it has basis?  You hope that the deceased had a friendly and helpful tax preparer.

Rick