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A lemon law settlement is only taxable for the part that exceeds your loss, which is the amount you were paid compared with the fair market value of the 'lemon' at the time you bought it.
You need to report the 1099-Misc income to avoid getting correspondence from the IRS.
So you should enter it twice, once as a positive number, and once as a negative number to offset the income.
The income, and the offset to income should appear on Schedule 1 line 9.
Income and expenses? don't see that exact category ........under miscellaneous income 1099-a, 1099c??? which do you select ?? not clear in explanation...it this the same process for 2021 year turbo tax?
@ekotop522 , from the instructions mentioned above, instead of income and expenses, please look for Wages & Income.
Please follow the steps below:
Thank you !!! I was able to locate and follow steps !!!! Cheers !!
Im in the same boat. Im getting a lemon settlement and had a few questions. First off how do you determine the FMV of your car at the time of purchase?
Also when entering the negative amount in "Other Reportable Income", what should we put in the description?
Thanks
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