Possibly. A 1099S is issued in reportable Real Estate transactions to report the sale or exchange of real estate. That portion of your house damaged would be treated as a sale and any gain can be excluded from tax if you lived in your home home at least 2 of the last 5 years. To determine the gain/loss you would need to allocate a portion of your home basis, or what you paid for it originally plus any improvements, to the damaged area. You should be able to do that by square footage.
TurboTax has a Sale of Home Section that can walk you through the information to report the 1099S proceeds on your tax return. When you start your TurboTax return it will ask you if you sold a home and you will want to indicate yes to include the information from the 1099S.
Click HERE for information on reporting your home sale in TurboTax.
