take it on what is left, 10,000. I assume the required RMD every year is independent of the amount as this could increase or decrease ( as mine did) I do realize there are other options such as just taking it all out but, I want to keep it in the investments in case the stock prices come back. Thanks
If your account balance was 25000 on December 31, 2011, 25000 divided by 27 is your RMD which must be withdrawn by December 31, 2012. This amount will be reported on your form 1040 as ordinary income.
If your Dad passed before he reached his "Required Beginning Date," that is the date that he would have had to begin taking RMDs himself, the first RMD that you must take begins the year after his passing. Therefore, you must begin taking your RMDs in this 2012 year and no later than December 31, 2012. Your 2012 RMD is based on the balance of his account (or the value of the inherited IRA, if his account balance was transferred to such IRA in 2011) as of December 31, 2011. It would be incorrect to base the 2012 RMD on an amount lower than such balance even though you suffered loses during 2012.
Your assumption that the "RMD every year is independent of the amount" is not correct because the calculation for each years RMD is based on the prior year end value of the IRA. Therefore, your RMD for 2013 will most likely be far less than that of 2012.
I am sorry for your loss, however, I hope this information helps you.