1099R with box 7 code B 8

[BHoffman]

Client received a CP2000 for not reporting the income from a form 1099-R.  The notice is showing $12,000 in unreported income from Mass Mutual.  The client did receive a 1099R from Mass Mutual, and I dutifully entered it in except forgot to prepare form 8606.

Box 1 $12,000

Box 2 $0.00

Box 5 $12,000

Box 7 B 8

My understanding is that the return of excess contribution from a ROTH is not taxed.  Only the earnings from the ROTH are taxed, and it looks like there are none as yet.  Can someone advise on how to respond to the CP2000?  Thanks!

[mwrightea]

I would fill out the 8606 part III for the year in question and attach with a letter explaining that there were no earnings along with a copy of 1099R and the CP2000.

[Catherine]

And expect more auto-generated letters before the one you send in gets read by a human.