The 1099-R is not nullified and must be reported on your tax return.
I believe you mean that they reduced the balance of your account by the amount you owed on the loan you took. So, you don't need to pay the loan back anymore. If so, then the amount of the loan that was cancelled is taxable to you. It is the same as if you took a distribution for that amount of money.
The 1099-R form should report the amount of money that was transferred to the new retirement account in box 1 and the amount in box 2(a) should be the amount of the loan that was forgiven.
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