Updated October 18, 2026. Quick answer: Lines 8 to 17 of Form 4972 start Part III, the 10-year tax option. They take the taxable amount from Form 1099-R, add the annuity value from box 8, apply a minimum distribution allowance for smaller amounts, and end with the amount on line 17. That amount carries to line 18.
What this part is for
These lines open Part III, which the form heads “Complete this part to choose the” 10-year tax option. The instructions say “You can use Part III to figure your tax on the” lump-sum distribution using that option, and that it is available “whether or not you make the 20% capital gain election.” The overview is on the Form 4972 page, and the later lines are at Form 4972 lines 18 to 30.
The lines, one by one
| Line | What the form says |
|---|---|
| Line 8 | “If you completed Part II, enter the amount from Form 1099-R, box 2a, minus box 3.” “If you didn’t complete Part II, enter the amount from box 2a.” |
| Line 9 | “Death benefit exclusion for a beneficiary of a plan participant who died before August 21, 1996” |
| Line 10 | “Total taxable amount. Subtract line 9 from line 8” |
| Line 11 | “Current actuarial value of annuity from Form 1099-R, box 8.” |
| Line 12 | “Adjusted total taxable amount. Add lines 10 and 11.” “If this amount is $70,000 or more, skip lines 13 through 16, enter this amount on line 17, and go to line 18” |
| Line 13 | “Multiply line 12 by 50% (0.50), but don’t enter more than $10,000” |
| Line 14 | “Subtract $20,000 from line 12.” |
| Line 15 | “Multiply line 14 by 20% (0.20)” |
| Line 16 | “Minimum distribution allowance. Subtract line 15 from line 13” |
| Line 17 | “Subtract line 16 from line 12” |
The $70,000 test on line 12 is part of that line’s own text. Lines 13 to 16 compute the minimum distribution allowance, and line 17 subtracts it.
Where the number comes from
Line 8 starts from the payer’s statement. The instructions say “If you made the 20% capital gain election, enter only the ordinary income portion of the distribution on this line.” “The ordinary income portion is the amount from Form 1099-R, box 2a, minus the amount from box 3 of that form.” See Form 1099-R box 2a and Form 1099-R box 3. The instructions add “If Form 1099-R, box 2a, is blank, you must first figure the taxable amount.” “If you didn’t make the 20% capital gain election and didn’t elect to include NUA in taxable income, enter the amount from Form 1099-R, box 2a.”
Line 11 comes from Form 1099-R box 8. Line 9 has its own instruction: “If you received the distribution because of the plan participant’s death and the participant died before August 21, 1996, you may be able to exclude up to $5,000 of the lump sum from your gross income.” The instructions also caution “Community property laws don’t apply in figuring tax on the amount you report on line 8.” If you shared the distribution with others, the form flags line 8 with “Multiple recipients (and recipients who elect to include net unrealized appreciation (NUA) in taxable income), see instructions”; see Form 1099-R boxes 9a and 9b.
A worked example
Illustration, not an IRS example. Every input is invented. The line 12 text sends amounts of $70,000 or more past lines 13 to 16, so this example uses an amount below that and works all of lines 13 to 17. Suppose line 12 is 40,000.
| Item | Illustration |
|---|---|
| Line 12 (suppose the adjusted total taxable amount is) | $40,000 |
| Line 13: smaller of 0.50 x line 12 ($20,000) and the $10,000 cap | $10,000 (computed) |
| Line 14: line 12 minus $20,000 | $20,000 (computed) |
| Line 15: 0.20 x line 14 | $4,000 (computed) |
| Line 16: line 13 minus line 15 | $6,000 (computed) |
| Line 17: line 12 minus line 16 | $34,000 (computed) |
In words: 0.50 x 40,000 = 20,000, which is more than the 10,000 cap, so line 13 is 10,000. Line 14 is 40,000 minus 20,000 = 20,000. Line 15 is 0.20 x 20,000 = 4,000. Line 16 is 10,000 minus 4,000 = 6,000. Line 17 is 40,000 minus 6,000 = 34,000.
Where it goes next
Line 17 feeds the rest of Part III. Line 12 states “enter this amount on line 17, and go to line 18” for large amounts, and line 19 later subtracts line 18 from line 17. Those lines are covered at Form 4972 lines 18 to 30. For the election in the earlier part, see Form 4972 Part II, lines 6 and 7.
Edition and line numbers
This page reads Form 4972 for 2025 and its instructions, the current file irs.gov served on 2026-10-18, for a distribution received in 2025. Check the edition printed on your own form and use that edition’s line numbers.
Common mistakes
- Working lines 13 to 16 for a large amount. Line 12 says “If this amount is $70,000 or more, skip lines 13 through 16”
- Forgetting the cap on line 13. The line says “Multiply line 12 by 50% (0.50), but don’t enter more than $10,000”
- Starting line 8 from the wrong box when Part II was used. The instructions say “The ordinary income portion is the amount from Form 1099-R, box 2a, minus the amount from box 3 of that form.”
Related: Form 1099-R box 2a, Form 1099-R box 3, Form 1099-R box 8, and Form 1099-R boxes 9a and 9b.
Sources
- Form 4972 (2025) with instructions, Tax on Lump-Sum Distributions: https://www.irs.gov/pub/irs-pdf/f4972.pdf
- IRS: About Form 4972: https://www.irs.gov/forms-pubs/about-form-4972
Read from the IRS documents linked above on October 18, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.