mcgintyboy, it's doubtful that you can avoid having an examiner at the IRS scrutinize your reporting of this. If the annuity company reports a taxable amount that is incorrect, you'll need to file a substitute Form 1099-R (Form 4852) to show the correct amount, provide information on your attempts to get the annuity company to correct the Form 1099-R and provide your explanation as to why the amount on Form 1099-R is incorrect and why your claimed amount is correct. Filing Form 4852 will require mailing your tax return and will result in your tax return and explanation being scrutinized by an examiner. Even if the annuity company leaves box 2a of the Form 1099-R blank and marks box 2b Taxable amount not determined, it's likely that the reporting will be scrutinized by an examiner if your tax return reports that less than the full gross amount is taxable. Whether or not the examiner accepts your explanation will determine whether or not you get any notice for under-reported income to which you would need to respond.
