Here is my my suggestion as a tax professional. Enter the 1099-R as it is recorded. Then offset the income by doing this.
- Go to federal>income and expenses>all income>>show more
- Less Common Income> Start
- Miscellaneous Income,>start
- Other reportable income>start
- Next screen asks Any Other Taxable Income>yes
- in the description area, be as detailed as possible. Brief but to the point.
- Now enter the taxable income in Box 2a of the 1099 as a negative number with a minus sign in front of the amount.
Keep all of your documentations and letters regarding this event. Be sure to document your conversations with Morgan Stanley and their refusal to issue a corrected 1099. Also keep a copy of this advice that I have just given you. Keep all of this in your tax return folder just in case if the IRS inquires about this reporting because you will want to be fully prepared and ready to state your case if you are asked to do so.
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