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Author: reitsbyziggy Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121599  
Subject: 1099R on Inherited Annuity Date: 3/19/2012 7:41 PM
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My mother passed away and she had an annuity purchased about 8 years ago that I will be inheriting as a beneficary. My portion of the distribution will total about $41K which I will take as a lump sum. The basis of this distribution will be approximately $36K leaving a taxable portion of about $5K. The annuity is with Nationwide.

I will be receiving a 1099R from Nationwide. Will they report the $41K in box 1 and $5K in box 2a? I have a CPA friend who says he has seen annuities where box 1 and 2a report the same amount (i.e. the Gross distribution) and then put a check mark in box 2b showing "Taxable amount not determined". That doesn't seem like it would be correct and I would have a terrible matching problem with the IRS on what is taxable. Since Nationwide has been making payments to my mother for the past 8 years I would think they would know what her basis is and the inverse of that (i.e. the taxable portion) and could pass that amount along to all the beneficiaries through the 1099R's.

My question to the tax prepayers on the board...how have you seen this kind of distribution reported on 1009R's? Any experiences with how Nationwide reports these distributions in general?
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