Ordinary income. Form 1099-G is officially for:
Federal, state, or local governments file this form if they made payments of:
- Unemployment compensation.
- State or local income tax refunds, credits, or offsets.
- Reemployment trade adjustment assistance (RTAA) payments.
- Taxable grants.
- Agricultural payments.
- received payments on a Commodity Credit Corporation (CCC) loan.
Based on your description, this sounds like a credit from the state -paid to you based on the sale. The ordinary income feels like a slap for your experience.
Entry, see Where do I enter a 1099-G for a state or local tax refund?
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