Several years ago I gave a company $5000 as an investment. I even received a stock certificate. Unfortunately, the company declared bankruptcy and I became a claimant for the $5000. I received $3500 in 2008 as a partial payback of the $5000. Subsequently I received a 1099misc for this amount. The only box filled in is Box 3 Other income for $3500.

I don't believe I owe any tax on this money. Do I need to request the company to rescind the 1099misc form or is there another tax form I need to complete that explains that this is a repayment of a debt.

Yes, you should contact the company why they have reported this on 1099-misc as income?
You may do this:
Report $5000 as cost and $3000 as sales price on schedule D (Form 1040), so that you have a loss of $2000.
However, you must get second opinion.

MukatA -

Many thanks... a second opinion is in the works.

photolover

Here is the second opinion: MukatA is correct, though the sales price is $3,500 (not $3,000), and the resultant loss is $1,500.

The issuance of the stock certificate clearly shows the money to be an investment, the conversion of which is shown on Schedule D.