How is 1040 line 16b determined when my CSA 10999-R shows "unkown" in the taxable amount and 3-Disabilitiy in Box 7?

The IRS says:

"If you retired on disability, the disability annuity you receive from the CSRS or FERS is taxable as wages until you reach minimum retirement age, as explained in this section.

However, beginning on the day after you reach minimum retirement age, your payments are treated as a retirement annuity and you can begin to recover the cost of your annuity under the rules discussed in Part II, Rules for Retirees" [in IRS Publication 721].

If your annuity began after November 19, 1996, then the taxable amount of your retirement annuity is determined by the Simplified Method as described on pages 6 and 7 in IRS Publication 721.

In general, this Simplified Method takes the amount of "cost" you have in the annuity ("cost" = after-tax dollars you contributed to the plan over the years), and spreads it over a number of payments based on your (and your survivor beneficiary’s, if one) estimated life spans, so that in each monthly payment, part of the payment is taxable and part is not taxable (the latter being the allocated amount of the return of your "cost" or contribution).

If your annuity began before November 19, 1996, then please see "Part II Rules for Retirees" in IRS Publication 721.