My 1099-R from my life insurance co has a Distribution code 7D. I contributed $125,000 (Box 5) and took out $125,079 which is stated in Box 1. Box 2 (Taxable Amt) shows $79 which is the amt earned during the short period I owned this annuity. The TurboTax progam shows that I owe tax -more than $22,000- in tax on this distribution. Did the insurance co use the wrong code? How can I owe this much tax when I paid $125,000 for this investment?
