U.S. · Tax forms
1099-R distribution code K.
A flag for hard-to-value IRA assets, used alongside another code.
Code K is added to a traditional IRA distribution made in assets that have no readily available fair market value, such as real estate, LLC or partnership interests, or shares not traded on an established market. It describes the asset, not whether the amount is taxable. Table 1 lists 1, 2, 4, 7, 8, G or Y as the codes that may go with K.
Check a pair of codes
Result
What the IRS says code K is
Table 1 says: "Use code K to report distributions of IRA assets not having a readily available FMV." It lists as examples stock or debt not readily tradable on an established market, an ownership interest in an LLC, partnership or trust (unless traded on an established market), real estate, option contracts not offered on an established option exchange, and any other asset with no readily available fair market value. The used-with column lists 1, 2, 4, 7, 8, G or Y.
The box 1 instructions repeat that a distribution from a traditional IRA of such assets takes code K in box 7a.
For a qualified charitable distribution (QCD) of these assets, Table 1 says to use code Y first with either 4, 7 or K. Code Y alone is not enough for hard-to-value assets.
How it affects Form 1040
A code K distribution is an IRA distribution, so the 2025 Form 1040 instructions for lines 4a and 4b apply: the total distribution goes on line 4a, and a fully taxable amount goes on line 4b with no entry on 4a. If you made nondeductible contributions to any traditional IRA, Form 8606 works out the taxable part (Exception 2).
If part of it is a QCD, the instructions put the total on line 4a and only the non-QCD part on 4b, with box 2 checked on line 4c.
Common mistakes
- Reading K as "taxable" or "not taxable". It only describes the type of asset. The other code in box 7a carries the age and exception information.
- Forgetting the second code. K sits beside a code from Table 1, such as 7 or 1.
- Using only Y for a QCD of these assets. Table 1 says Y must be used first with 4, 7 or K.
- Skipping Form 8606 when you have nondeductible IRA contributions.
Worked example
Illustration, not a real case. A 62-year-old takes an LLC interest held in a traditional IRA as a distribution. The IRA custodian reports the value in box 1 and enters codes 7 and K in box 7a. The owner enters the total on line 4a and works out line 4b using Form 8606 if nondeductible contributions were ever made.
Related codes
Code K sits beside S, U, 9. The full 1099-R distribution codes lookup lets you search every code; the other pages in this set are 6, 9, E, F, S, U, W.
Sources
Retrieved November 2, 2026. Review status: needed before this page is treated as final.
- IRS, Instructions for Forms 1099-R and 5498 (2026): Table 1, Guide to Distribution Codes, plus the box 1, 2a and 7a text.
- IRS, Instructions for Form 1040 (2025): lines 4a and 4b (IRA distributions) and 5a and 5b (pensions and annuities).
Form 1099-R changes for 2026: box 7 becomes box 7a. On forms for earlier years the code is in box 7. The Form 1040 instructions read are for tax year 2025.
Frequently asked questions
Does code K tell me the distribution is taxable?
No. It identifies the kind of asset. Age and exception information come from the other code in box 7a.
Can K be the only code on the form?
Table 1 lists 1, 2, 4, 7, 8, G or Y as the codes used with K, so a second code is expected. Ask the payer if you see K alone.
What is the QCD rule?
Table 1 says to use code Y first with either 4, 7 or K when a QCD is made with these assets.
Which Form 1040 lines apply?
Lines 4a and 4b, because the distribution comes from an IRA.
Not tax advice
This page summarizes IRS instructions written for payers and is not tax advice. The payer, a CPA or an enrolled agent can confirm what a code means for your situation. Everything runs in your browser; nothing you enter is sent anywhere.