I have a client that took an early withdrawal from their IRA for $69,000 to buy their first home. However, they became ill during the year and did not complete the purchase. The 1099-R was marked with a Distribution Code 1 - No known exception. And, if they CAN avoid penalty (I understand it's only on the first $10,000) do I simply enter that on a 5329-T, even though there is no home to report in the taxes?