Added XBOX Live Gold 12 month code and it converted it to a 4 month XBOX Game Pass Ultimate.

It didn't come with 4 months of Ultimate, it converted the Gold you added to 4 months of Ultimate. If you already have Ultimate on your account and you add a standard Gold or Game Pass code, it converts the time to Ultimate (since Ultimate already includes them) at a conversion rate based on the price rather than time. So the 12 months of Gold was converted to 4 months of Ultimate since a 12 month Gold is equal in price to Game Pass Ultimate.

When you added the code did you have Game Pass Ultimate? When you add Gold or standard Game Pass and you already have Ultimate, it'll convert the Gold/Game Pass to Ultimate since Ultimate includes those, but it converts at a ratio based on price rather than time. 12 months of Gold would have converted to 4 months of Ultimate.

It's because you're trying to add it to a Game Pass Ultimate subscription. You would need to cancel that subscription or wait for it to end before adding the Gold code in order to get the full 12 months of Gold. Otherwise, it will be converted. The codes
are converted based on price rather than time. 12 months of gold is equal in price to 4 months of Ultimate.

If you currently have Game Pass Ultimate and attempt to redeem a 12 month Xbox Live Gold code, it will convert to a 3 or 4 month Ultimate subscription. If you want to continue with just Gold for 12 months and not Ultimate, you would have to wait for the
Ultimate to expire before redeeming the regular Gold code.

If you don't currently have Ultimate, then you should have no problem redeeming the 12 months of Gold.

Did you have Game Pass Ultimate when you added the subscription? If you have Ultimate and you add a prepaid Gold or Game Pass code, the code is converted into Ultimate, but at a conversion rate based on price rather than time. 12 months of Gold is equal
to 4 months of Ultimate.