1099 misc box 3 income/expenses

[Rejected Federal]

Received a 1099 misc box 3 other income for replacement of fencing, trees, and shrubs due to a county road widening project. We will be replacing the fencing, trees, and shrubs. How/where do you enter the expenses to offset the income. (This payment is not for temporary or permanent easements -that was reported separately) 

[KrisD15]

You can just not report the 1099-MISC or enter it and back-out the income. 

This is the same as an insurance payment for repairs, it is not taxable income.

a) Enter Form 1099-MISC so the IRS can match it

b) Back out the income so you are not double-taxed

 To do that-

Enter the 1099-MISC Under

Wages & Income

Other Common Income

Income from Form 1099-MISC   START

Enter the 1099-MISC as it was reported, Type "property damage reimbursement " or something similar for the description,

Select "None of these apply" for uncommon situations, 

"NO" not like main job, 

Only got it in 2024, 

"NO" no intent to earn money, 

DONE

THIS GETS THE FORM ON YOUR RETURN, now back out the double income-

Wages & Income

LESS COMMON INCOME

Miscellaneous Income, 1099-A, 1099-C    START 

Scroll all the way down to the LAST option- Other reportable income   START 

Type "property damage reimbursement" on 1099-MISC" or some other description the IRS will understand and enter the amount AS A NEGATIVE AMOUNT (put a minus sign (-)  in front of the number

Done

The 1099-MISC as well as the negating entry will both be on Schedule 1 line 8z

This results in zero income