Home equity guarantee taxable?

Was able to collect 39,563 under the southwest home equity assurance plan. They told me it was tax free because it pertains to me getting a fair value for my house. I only made 100 on my home that I lived in. I was issued a 1099 misc. income form. How do I explain to IRS that this is not income. It means I will either get 5,000 or owe 6,000. My tax man file to receive and explain on the letter they send for an audit. What should I do? Called IRS but they said they would get back to me But never did

SAVAGE SAYS: I contacted the Southwest Home Equity Assurance plan. They said it is just their job to send out the 1099 — reporting the payout. But when I pressed, they promised they would have their lawyers look into whether this should be considered taxable, and I will post their answer when I get it — I’ll keep pressing them. In one way, this is like an ‘insurance’ payout — which would not be taxable. But I’ll let their attorneys figure this out, now that so many people are receiving money under the plan, which was originally designed to protect against falling real estate prices because of “changing” neighborhoods — but is now resulting in payouts because of the housing crisis!