The reference you provided is bogus. Form 4797 is for reporting gains or losses on business property. A nonqualified annuity is not business property. See the instructions for Form 4757: <a rel="nofollow" target="_blank" href="
https://www.irs.gov/pub/irs-pdf/i4797.pdf">https://www.irs.gov/pub/irs-pdf/i4797.pdf</a>
In recent years nonrecoverable basis was reportable as a miscellaneous deduction subject to the 2% of AGI floor (§?67), but that deduction has been suspended by the Tax Cuts and Jobs Act of 2017 for tax years 2018 thorugh 2025.
From IRS Pub 575:
Losses. You may be able to claim a loss on your return if you receive a lump-sum distribution that is less than the plan participant's cost. You must receive the distribution entirely in cash or worthless securities. The amount you can claim is the difference between the participant's cost and the amount of the cash distribution, if any.
Generally, the loss is claimed as a miscellaneous itemized deduction subject to the 2%-of-adjusted-gross-in-come limit on Form 1040, Schedule A. However, for tax years after beginning December 31, 2017, and before January 1, 2026, these miscellaneous itemized deductions have been suspended. Therefore, a deduction for these losses is not allowed.
TIP: A loss under a nonqualified plan, such as a commercial variable annuity, is deductible in the same manner as a lump-sum distribution.
