How to achieve rounded corners in any shape

I am trying to reproduce the first shape in Photoshop. Please educate me on how to achieve it, because I cannot figure it out by myself. Is it even doable?

I am trying to reproduce the first shape in Photoshop. Please educate me on how to achieve it, because I cannot figure it out by myself. Is it even doable?
Hi DVTCHK — yes, it is doable, but not with the corner-radius fields: those only work on a single live shape, not on the inner join after two shapes are combined.
Workaround that gives you exactly that inner fillet:
1. Put the two rounded rectangles on one shape layer, with Combine Shapes as the path operation.
2. With the Ellipse tool (also set to Combine Shapes), draw a circle centred exactly on the sharp inner corner — hold Alt/Option to draw from the centre, and use Snap to hit the point. Make the circle's diameter twice the radius you want for that corner.
3. Choose Merge Shape Components from the Path Operations menu.
Only the quarter of the circle that sticks out into the notch becomes new outline, so the inner corner turns into a smooth arc of that radius — the rest of the circle is inside the shape and disappears in the merge. Hope that helps!
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