Taxpayer took a $7000 distribution from his annuity and used the money to set up a Charitable Gift Annuity. The 1099-R shows gross distribution and taxable distribution both at $7000 with a code 7. The letter that the taxpayer received at the time of the distrubtion said - Your annuity was issued as a tax-free exchange.
The taxpayer also received a letter from the charitable organization saying thank you for setting up the charitable gift annuity. Goes on to say the charitable deduction for the year is $3212.85, and the taxpayer will now receive an annual payment from the organiztion - part taxable and part tax-free.
My question is regarding the $7000 distribution. Is this all taxable, and then the taxpayer gets a charitable deduction for $3212.85. Or, do you think this 1099 was prepared incorrectly, the entire distribution is tax-free since it went to the organization, and then the taxpayer won't get the charitable deduction?
The taxpayer also received a letter from the charitable organization saying thank you for setting up the charitable gift annuity. Goes on to say the charitable deduction for the year is $3212.85, and the taxpayer will now receive an annual payment from the organiztion - part taxable and part tax-free.
My question is regarding the $7000 distribution. Is this all taxable, and then the taxpayer gets a charitable deduction for $3212.85. Or, do you think this 1099 was prepared incorrectly, the entire distribution is tax-free since it went to the organization, and then the taxpayer won't get the charitable deduction?
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