Investors & landlords

The payment is clearly not self-employment income, so it would be appropriate to report it as "Other Income" and make a separate negative entry to other income to cancel it out. After you enter the Form 1099-NEC in TurboTax, you will come to a screen that says Does one of these uncommon situations apply? To which you need to check the box that says the income is not money earned as an employee or self-employed individual:

To exclude the income from taxation:

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 adjustment amount as a negative number