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Note that if your IRA contains basis from non deductible contributions, you must complete Form 8606 EXCLUSIVE of the QCD to determine the taxable amount that goes on line 4b. This instruction recognizes that the QCD amount comes solely from the pre tax IRA balance, while the rest of the distribution is pro rated to reflect the IRA basis.
In other words, the IRA Custodian ignores both your basis and the QCD in completing the 1099R, and the taxpayer is responsible for applying both of these variables.
- This reply was modified 1 year, 8 months ago by Alan S..