TAHAWK, the problem that you describe can result from reporting retirement income on the wrong line of 2016 Form 1040 or 1040A. These forms have two lines for reporting retirement income, one for income from IRAs and the other for income from all other types of retirement accounts. Incorrectly marking (or not marking) the IRA/SEP/SIMPLE box on TurboTax's 1099-R form can cause the income to appear on the opposite line from the one that it should be on. When that happens, the automated system at the IRS treats as unreported whatever amount is missing from the correct line, despite this amount being present on the other line, and the IRS treats the amount that should not have been on a particular line as simply other reportable income that the IRS didn't know about.
Check your Form 1040 lines 15 and 16 or Form 1040A lines 11 and 12 to see that taxable amount of income from IRAs is appearing only on line 15b or 11b and that the taxable amount of income from other types of retirement accounts is appearing only on line 16b or 12b. If any of the retirement income is on the wrong line, that's what you need to explain that to the IRS. The information that you've indicated is on the CP2000 suggests that Forms 1099-R showing a total of $43,xxx of retirement income might have been reported on the wrong line of Form 1040 or 1040A.
