1. Give up on trying to get them to re-issue the 1099-R...see #2.
2. Is there a dollar amount in box 14? If so, then the trustee has already sent this withholding to the state of California. This is why they just can't "change" it - the money is gone to California. The only way you can get it back is to file a California return and show that you owe no tax there.
3. Make sure that you immediately notify the issuer of the 1099-R that you don't want any tax withheld for California in the future (point out that many military members don't pay tax to the state they happen to be living in).
4. Was the purchase of the land inside the IRA or outside? You owe no return or explanation to New Mexico in either case. The "income" you are referring to was a withdrawal (distribution) to buy this land outside the IRA, right?
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