Hi,

I received a 1099misc for a settlement out of court for a partial recovery of downpayment lost on a preconstruction condo. The condo development was never completed so we sued the company and was able to recover some of our cash deposit. How do we report this on our tax return? I don't think it's taxable but am not sure where to take the offset (to net a zero taxable income)?

Thanks for your help. Look forward to hearing from you soon.

Regards,
Rose2864

“ How do we report this on our tax return?”================= For reporting on your individual return you can include the 1099-MISC on line 21of 1040 Other Income and then make another offsetting negative 1099 entry on the same line with a description that the form issued and is being corrected. This will make the statement that you are aware of the original filng and help to notify the IRS that a correction is being made. (I mean You may add an additional line on the detail for income showing the necessary adjustment to the 1099-Misc amount. The description for the detailed statement should read "Adjustment to Correct 1099-Misc." )Maintain your records with proof that your adjustment is valid. If you are audited by the IRS, you will need to show the auditor why you made this adjustment and prove that it was appropriate. The issuer ‘d send copies of 1099/1096 to the IRS.I guess yo need to contact the IRS for more info in detail.
turn,zero taxable income)?”============UNLESS you deducted loss on your previous return, you do not report the partial recovery of downpayment lost on a preconstruction condo on your return as there is NO gain generated(UNLESS you received interest income). You need to include Interest on any legal settlement or court award as ordinary taxable income on your tax return: ;