Lemon law Rv buyback settlement taxes

[Burgett450]

So my question is what am I going to be taxed on or what do I put on my taxes? The manufacture is buying back the unit from us.  It’s a lemon.

Cash price was $42,450

$46,227 with taxes and fees.   California 

…… ok so 

our settlement is $53,788

The are paying off our loan, $31,262

The rest of it ($22,525.54.)

(Which is  the down payment ($11227.54 )and monthly payments we made to the bank ($11,298).

I’m just wondering what we will be taxed on 1099?   We are settling for what we put into the RV.

[Vanessa A]

Your taxable amount would be your gain on the buyback.  So $53,788 would be your sales price.  Your purchase price would be $46,227.  The difference would be the amount subject to capital gains taxes as this would be basically a sale of your RV since they are buying it back. 

[Opus 17]

Don't enter this as a 1099-MISC.  Enter it as an investment sale.  Choose "other" for the type of property, and enter the details as if you sold the car to the settlement company or dealership.  Treating it as an investment (capital gains) will give you a lower tax rate as long as you owned the car for more than a year.