1099NEC for fence repair

[suzyq210]

Our county repaired a bridge adjacent to our property.  They paid us about $900 to compensate us for parts of a fence they had to remove during the repair.  We do not plan on replacing or repairing the fence that was removed.  They reported this payment on a 1099NEC form, which it appears we now need to report as income.  But this is not for any type of work or services we provided.  Is there some way for me to handle this without having to pay income tax on it??

[Vanessa A]

This should have been reported on a 1099-Misc instead of the 1099-NEC.  You can enter it by selecting the following 

• Federal
• Income and Expenses
• Scroll down to Less Common Income and click Show More
• Start next to Miscellaneous Income
• Start next to Other Reportable Income
• For description refer to the 1099-NEC from the county

This will put it on line 8z of your schedule 1 as other income.

[suzyq210]

Entering it into Turbo Tax isn't the problem.  Do I have to claim it as income?  It is not for any services provided by us.  It is for compensation for damage to a fence.

[DaveF1006 · Accepted solution]

Yes, it is considered income in the respect you do reap an economic benefit as a result of the removal of your fence. You benefit in one of two ways.

1. Since you do not intend to repair the fence, you have the economic benefit of the money you received to use it for your own personal use.
2. If you do decide to spend the money for the fence, you can add the cost of the fence as an improvement to the basis of your home for capital gains considerations when you sell your home.

Report this in the manner that Vaneesa A outlines in her previous post.