@ztvv 

@George4Tacks 

My client's Minnesota-based attorney claims the 1099-Misc amount is not taxable. My client says the amount on the 1099 (which is 25% of his investment) is a return of a portion of his investment.

I have found no guidance other than this:

From BHB Advisors.com - Investors who receive the Angel Tax Credit will have additional tax considerations. The Minnesota Department of Revenue will issue investors a 1099-Misc that will be required to be reported on the investors federal and state tax returns as income for the year the credit was received.