Closed an annuity to roll entire amount to brokerage account. I did NOT receive any of the money. Is this event taxable? On the 1099, distrib code is 7D, 2A is blank

[jedenning01]

If taxable, does the question become what is the basis?

[DDollar · Accepted solution]

A code D in box 7 indicates that your annuity was non qualified, which means it was not an IRA or other retirement account.  This means that it was a taxable distribution.  The amount that is taxable is the gain - the amount in excess of the amount you put in the annuity.  For non-qualified annuities, a 10% federal tax penalty may apply to the taxable portion of an amount received before age 59½.

[jedenning01]

The annuity was received as a part of a divorce settlement and has lost value since the date it was received.  Would my basis be the value on the date it was received?

[DDollar]

No.  Your basis is the original basis.