Gross Distribution and Taxable Amount on 1099R

[Shemonstero]

I received a 1099R from being a beneficiary. 
The Gross Distribution and Taxable amounts are different. There were some federal tax withheld. For box 16 (State Distribution) the taxable amount appears.
Everything appears properly in Turbo Tax. 

When I go to the state return, it is listing the Gross Distribution and not that taxable amount... so I owe a significant amount of money that was unexpected. Should this be calculated from the Gross or Taxable? And how do I go about fixing this is this is a problem?