According to Publication 4345 see HERE under subsection "Loss in Value of Property" the rules relating to income received from a settlement in reporting it as income bear no effect on reporting income on the money you saved from getting it done at a lower cost. Rather, it all depends on whether the property settlement is more or less than the adjusted basis of the property. In your case, only if the total amount of $75k is "more" than the adjusted basis of the roof damage you suffered ,would you have to report it that excess as Misc. Other Income on your Form 1040 Line 21.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
