I have a widowed client that inherited her former husband's Roth IRA in 2014. She opted to treat it as her own as she didn't plan to touch it. However, in 2017 when she was 58 she did withdraw $40,000. Her basis was not known, so her tax preparer filed it as nontaxable and apparently hoped for the best. The IRS is now auditing her for 2017 and says she owes $18,000. Her husband had the account with multiple firms over the years which has made tracking the history difficult.
She has copies of checks for Roth contributions from 2007 to 2012 totaling $29,000. She may be able to find brokerage statements to support this. She has not found proof of contributions prior to 2007, but knows that he did start contributing to a Roth in the late 1990's. His contributions easily exceed the amount that was distributed and therefore should be nontaxable. Proving it is the hard part.
Any suggestions on what is needed to satisfy the IRS in this situation?