In 2016 I rolled my 401k into a traditional IRA. In 2017 I took an early distribution to pay for higher education. Do I include in taxable income the entire distribution or do I reduce the amount from the rollover on line 2 of F8606 and only include in income the difference?

The ENTIRE distribution is included in your taxable income, but if you used ALL of it for higher education costs, then you can claim an exemption from the 10% Early Withdrawal Penalty.

Thanks - Publication 590A stated that any nontaxable amounts that you roll over into an IRA become part of your basis - so I am confused.