I'm no CPA, so take this with a grain of salt...
Was 2011 her first year required to take RMD? (in other words, did she turn 70.5 in 2011?) ... because if so, she technically doesn't have to take RMD for 2011 until April 2012. In that case, it was completely within IRS guidelines to take out 2011 RMD in 2012 and put it - along with the 2012 RMD - all on 2012 taxes (2 RMDS both on 2012 return, exactly as the 1099-R is having her do). The first RMD is not required to be taken out until April of the year following turning 70.5. Every RMD after that must be taken out by December.
Regardless of whether 2011 was her first required RMD or not, I don't think any amendment would be needed for 2011. It would all be taxable income for 2012 and she would merely have to show the IRS that it was the custodian's fault that the 2011 RMD didn't come out until 2012. All the IRS really cares about is that she took out all required RMDs and declared it as taxable income. Of course if she turned 70.5 in 2011 she doesn't need to show them any proof about custodian mistake because it was fine the way it happened to begin with.
You reach age 70½ on August 20, 2012. For 2012, you must receive the required minimum distribution from your IRA by April 1, 2013. You must receive the required minimum distribution for 2013 by December 31, 2013.
If you do not receive your required minimum distribution for 2012 until 2013, both your 2012 and your 2013 distributions will be included in income on your 2013 return.
To sum up:
1. If she turned 70.5 in 2011, she just needs to do her 2012 taxes with both RMDs on there, no need to send letter from custodian or amend 2011 return.
2. If she did not turn 70.5 in 2011, then it was a screw up and she needs to consult a CPA. Most likely, it's still all going to go on 2012 taxes, but by sending proof of the custodian's mistake she won't be charged a penalty by the IRS. The main thing is that she took out all required RMDs and all have been declared as income.
This post was edited on 3/6 at 3:33 pm