The issuer of the 1099-R is responsible for reporting the money Out. They don't necessarily know, nor are responsible for, what happened next. They don't have anything to do with the reporting for the end result, just the facts they are responsible for. If someone under 59 1/2 took out money, that is code 2. Exception applies means someone preparing the tax return will be responsible for the due diligence and reporting of that exception.

That's you. You'll be entering the basis, and confirm that there are no other pre-tax, deducted, or never taxed funds in any Trad IRA, SIMPLE IRA, SEP IRA or rollover Trad IRA. Otherwise, this isn't a backdoor, it's a pro-rata conversion.