@TaxGuyBillYou are right that Line 23 [of form 8606] is NOT the amount subject to a penalty and that does NOT automatically go to Line 1 of the 5329. It is just in this example, the two number are coincidentally the same.

If we were to change the 2015 and 2016 conversion amount to 13,000 and 17,000 respectively instead of 10,000 and 20,000. Then the Line 1 of the 5329 should be 17,000 and line 2 still 10,000? Does your software produce this?

I am getting 23,000 and 10,000 for form 5329 line 1 and line when I filled out as @George4Tacks has shown, which does not make sense.