Since the company paid your share of the settlement and
included the amount as income on your Form 1099-MISC, you can deduct it on your Schedule C expenses.
There is not a specific category that makes the most sense
for this. It would be easiest to include
it in the Less Common Expenses
section, using the Other Miscellaneous
Expenses category. Doing so will
allow you to enter your own description for the expense.
