Unless you are in the business of drilling wells, the cost of the dry hole drilling is truly a Schedule E entry, however, it is not unusual for someone to receive a 1099MISC in error, usually due to someone not understanding how this should be reported.
Anytime you receive income listed on a 1099MISC in box 7, IRS's position is that the income should be reported on Schedule C
. The reason they want it reported there is so you can pay the SE tax
. Even though you would not owe SE tax since your income was only $120, you want this reported correctly so that should you ever start receiving royalties, you will not pay SE tax on them (royalties are also reported on Schedule E)
That is why I asked the follow up questions, but in answer to your question does the fact that the IRS stated that this should be reported on Schedule C and I stated it should be reported on Schedule E....my first impression is no.....but I truly need the additional information of who paid you and why before I can state
that with 100% confidence.