Not a pretty solution, add code 8 in addition to code 4.   The distribution will be excluded, however Code 8 is associated with Return of Contribution taxable in current year.

That triggers an explanation statement.

It would be sad to say software error requires this so tax is calculated correctly.

I did try overriding on 8606, however cells/lines 7, 9, 10, 12, are calculated elsewhere - what I mean is if you override line 7, the variable, then line 9 should adjust because it should include line 7.    It is instead pulling numbers from somewhere else.   Ok, so I overrode line 9.   Line 10 calculates ok.  Line 12, Should use the ratio and line 7, but instead it is using the incorrect value that would otherwise appear on line 7. 

Kudos, Proconnect seems to work correctly  if you have all Ts crossed and Is dotted.   It comes at a higher cost.

I don't like though how controlling Intuit is, and if you give them client information, they have it forever!