Investors & landlords

Yes, you may need to report that on your return.  

If the funds received were part of a lawsuit settlement you would reduce the basis of the investment as indicated above in DavidS127 answer:

Assuming the proceeds from the court case reported to you on Form 1099-MISC are solely for the loss in the value of your investment, it does not need to be reported on your tax return.  Instead, it reduces your "basis" (net investment) in the investment you made.

Report the disposition of your remaining investment using the path Federal>>Income & Expenses>>Stocks, Mutual Funds, Bonds, Other.  When you add the "sale", it will ask you if you did or will receive a Form 1099-B.  When you answer "No", TurboTax will walk you through the entry of the disposition of your asset.  Report "zero" for the "Proceeds", and report your net investment (after the court payment) in the "Cost or Other Basis".  Use the date of the court ruling as the "Date sold or disposed".

If the Form 1099-MISC reports payments for something other than loss in the value of your investment, it may be taxable.  Refer to IRS Publication 4345 at this link for a summary of the tax implications of a lawsuit settle...t for guidance on whether the payment is taxable.

However, if you have a totally worthless investment you may be able to claim that as a capital loss.  Here is a TurboTax Help Topic on Reporting worthless investments:Worthless Investments  If the 1099 received represents a "portion of the original investment" as you indicated, you can consider the 1099 as the "sales price" for purposes of your Captial loss and the amount you paid for the investment as your cost basis.  

Please be aware however, that you could still receive a notice from IRS advising you that you did not report the additional 1099 Income.  You would need to respond to the notice with a copy of your Schedule D showing that the 1099 income was claimed and an explanation of the transaction.