Normally, you would subtract the value of the gift from the tax deduction you report. In other words, if you made a $1000 donation and received a gift worth $100, you should only report a donation of $900.
It looks like prior versions of Turbotax will ask, when you enter the 1099-R, did you transfer the money to charity, and the choices are All, Part, or None. You would select Part, and enter the amount of the distribution that counts as a deduction (the amount not covered by the value of the gift). That should leave the portion of the distribution representing the value of the gift as taxable income.
