I have a similar situation. I received settlement monies for a defamation claim and received a 1099 MISC Box 7 filled in with the settlement amount. On my 1040, TT put it on line 21- Other Income with "Settlement Income" from 1099MISC. However, I just received a proposed change notice from the IRS where they also added the Self Employment taxes. I thought defamation was in the category of Ordinary Income and not subject to SE taxes. Thoughts anyone?
