Thank you but this was not a legal lawsuit settlement. This was a voluntary settlement to compensate us for losses incurred due to non performance of our instructions to sell the inherited stock on the date of transfer into our accounts from the decedent’s account. If the stock had been sold as requested on the date of transfer then there would have been negligible capital gain or loss to report. You are correct they designated the cost basis as the value on date of death. We have not claimed the capital loss but shouldn’t the true cost basis be that value minus the settlement though? I know I can adjust the cost basis but the settlement amount increases our tax liability much more than any capital gain we would owe if we did that and we still don’t know how to handle the issued 1099-MISC which we don’t think was the proper way to report it.
