Deductions & credits

Assuming that the payment was for lost value, how would one enter this into their taxes?
The scenario:
- A = cash value of the vehicle on the date of the settlement being awarded (a CarMax Appraisal should be sufficient to declare the value of the vehicle)
- B = Cash value of settlement (as reflected on a 1099-Misc)
- C = Original purchase price of vehicle (including ttl?)

If A + B are greater than C, only the amount beyond C should be taxable in a lost value claim?  How would enter this or modify the 1099-Misc entry?  

If A + B are less than C, then the owner has not been compensated beyond the original value, and does not have to claim the 1099.

This is the way I interpret the discussion.