I'm not sure the 1099 issuer can issue a different type of 1099. How would the issuer modify the 1099 and still comply with their reporting obligation ?? Is there another type of 1099 for this [personal injury settlement]?
I was surprised to see that the suggested work around (entering an "offset" amount in a different section) actually does work and has the result of showing the 1099 on Schedule 1 along with the offsetting reduction on a separate line, completing the obligation to report the income without including the total in taxable income.
