I am getting a payout from an annuity. Some of the funds used to purchase the annuity came from a traditional IRA , so I need to use the simplified method to determine the taxable part of the payout. On the 1099-R form the IRA/SEP/SIMPLE box is checked. The distribution code is 7. When I try to fill out the simplified method form, turbo tax gives me an error, complaining that the IRA/SEP/SIMPLE box is checked. If I uncheck the box the error message goes away. The payout came from the annuity, not the IRA so I should be able to do this. I checked with the issuer of my 1099-R and they insist that the form is correct. They also confirmed that the distribution came from the annuity and not the IRA.
I think that the IRS will complain if I uncheck the box. How can this be done correctly?
