A participant failed to take a RMD for 2007.

We just took over the Plan from another Recordkeeper.

Now I am trying to calculate the 2008 RMD, and need to get the 12/31/2007 Account Market Value in order to do the 2008 RMD calculation.

Since the 2007 RMD was never done, the 12/31/2007 Account Market Value will still include the 2007 RMD amount that was not distributed.

My question is do I need to deduct the 2007 RMD amount that was never taken from the 12/31/2007 Account Market Value in order to get the true 12/31/2007 Account Market Value to calculate the 2008 RMD?

According to EPCRS, yes. From Rev Proc 2008-50:

.06 Failure to timely pay the minimum distribution required under § 401(a)(9). In a defined contribution plan, the permitted correction method is to distribute the required minimum distributions (with earnings from the date of the failure to the date of the distribution). The amount required to be distributed for each year in which the initial failure occurred should be determined by dividing the adjusted account balance on the applicable valuation date by the applicable distribution period. For this purpose, adjusted account balance means the actual account balance, determined in accordance with § 1.401(a)(9)-5 Q&A-3, reduced by the amount of the total missed minimum distributions for prior years. In a defined benefit plan, the permitted correction method is to distribute the required minimum distributions, plus an interest payment representing the loss of use of such amounts.