What you seem to be describing is a distribution of appreciated employer shares. When reported correctly, TurboTax handles these correctly.
1. What is the code in box 7 of the Form 1099-R provided by the payer?
2. Is the Net Unrealized Appreciation shown in box 6 of your 1099-R?
3. Is box 2b Total distribution marked?
4. Is any amount shown in box 3 of your 1099-R?
If you were born before January 2, 1936, there might be an amount in box 3 of the Form 1099-R that is eligible for capital-gains election and could be the reason that you are seeing capital-gains tax. Look to see if your tax return includes Form 4972 Part II that would result from you telling TurboTax to make this election.
