It would seem the money you received in 2018 would have reduced your cost basis in the partnership, maybe as a return of capital. If that is the case, and if you had any cost basis left at that time, then the additional $3,000 may also be a return of capital.
- First you must be able to show your cost basis immediately before the payment, then if it is in fact a return of capital, then none of it would be taxable now.
- Second, if it was more than your cost basis, then you would report as income the difference. Your CPA should be able to tell you what your ending cost basis was after the payment was received in 2018.
To reiterate, you must have documentation to show your cost basis (and adjusted cost basis for income loss on the partnership which would be an increase, your payment received in 2108 which would be a decrease, to name only some of the transactions) so that you are prepared to show why you did not report some or all of the settlement.
@Justin202203
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