First, make sure that your client didn't also withdraw a similar amount that would explain the 2 1099s.  If all that was "withdrawn" was the loan amount that was not paid back report the $23K as an early distribution and attach a note to the return that there was an error in reporting and the second 1099R was created in error.  But chances are, the IRS will never read the note so tell the client that he may receive a notice somewhere down the road and be prepared to deal with the issue a second time with the IRS.  But only go this route if you are 102.931879 percent positive that you are only dealing with one "distribution".