We are a property management company that made a settlement payment to a tenant whose apartment was flooded; we paid for storage of personal items, temporary living cost, and damages. Is this reportable on a 1099-MISC?

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A settlement that reimburses the tenant for loss only is not reportable. Damages paid that are “replacement of capital” are excepted from reporting.

If this was a settlement as a result of a judgment and involved punitive damages over and above replacement costs, it would be reportable.

See the Instructions for Form 1099-MISC, page 6.

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