I'd guess some type of liquid or chemical seeped onto the bill in that corner. Different household chemicals are known to have different effects, but I don't have them memorized.
Maybe that's why it's damaged-it became brittle or soggy.
Unfortunately I don't believe that bill will ever be worth more than $1. It's possible you'll even have a hard time getting $1 for it, depending on where you try to deposit it.
-wheatiefan