As a test I entered a 1099-R in TurboTax with an amount in box 1, zero in box 2, and G in box 7, and with the IRA/SEP/SIMPLE box checked. TurboTax did not treat it as taxable.
Is the IRA/SEP/SIMPLE box checked on your 1099-R? If so, did you enter it that way in TurboTax? That's the box between boxes 7 and 8 that KarenM90 is talking about. If the account you transferred was a traditional IRA the box should be checked.
How are you determining that TurboTax is treating the distribution as taxable? Look at your Form 1040, not a screen in TurboTax. The amount of the distribution should be on line 4a, or included in the total on line 4a. It should not be included in line 4b. If you did not have any other IRA distributions, line 4b should be zero, which indicates that the distribution is not being treated as taxable. The word "Rollover" should appear to the left of the amount on line 4b. Is there anything on your Form 1040 that is not as I described here?
