I received 25k for damages for a wellsite on a 1099 Misc. It isn't taxable because of the land basis, but how do I report it.

[MinhT · Accepted solution]

You would report the amount on form 1099-MISC by entering the form 1099-MISC in Other Common Income > Form 1099-MISC. Make sure to enter the amount in Box 3.

Then as the amount is not taxable, you would reverse it out by entering an equivalent negative amount in Other Reportable Income and describe it as Non-taxable damages reported on 1099-MISC. This would cancel out the 1099-MISC and also avoid attracting the IRS's attention if you did not report the 1099-MISC,

In TurboTax, to find Other Reportable Income, follow these steps:

• Click on Federal Taxes, then on Wages and Income
• Under All Income, locate the Less Common Income section
• Click Show more and click Start next to Miscellaneous Income at the bottom
• On the next page, click Start next to Other Reportable Income (see attached screenshot).