Death Benefit from Long Term Disability Taxable?


My wife passed away on 1/27/09. She was on long term disability since 07/2002. After her death, I received a letter from the disability insurance company stating that I would be receiving a lump sum death benefit which they sent to me.

I received a 1099-R with Box7 Distribution code -4 from them with the amount I received in the other income box.

I did not claim this since it was a death benefit distribution. I have now received a CP2000, stating I under reported. Is this taxable income?

Thank you very much for your assistance.

Tom