You can enter the Form 1099-Misc as income and then enter an adjustment to lower it down to the correct taxable amount as follows:
1. From the Federal menu in TurboTax find Wages and Income
2. Find Less Common Income
3. Choose Miscellaneous Income, 1099-A, 1099-C
4. Choose Other Reportable Income
5. Enter a description of the adjustment and the amount as a negative number
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