We got a $1500 settlement this year for a defect in a cam9er we bought in 2013. They sent us a 2016 1099MISC with $1500 in box 3 (other income). Is this taxable income?

[SeanE1 · Accepted solution]

No, you originally spent after-tax income to purchase your camper and received $1,500 back as compensation for the defect.  This is not taxable income. The IRS may question why you did not include the amount on your tax return at which point you should tell them why you received the $1,500, and supply them with the original receipt and any other paperwork pertaining to the transaction.