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You are correct.
IRS Publication 551 Basis of Assets, page 9 states:
If you use the donor's adjusted basis for figuring a gain and get a loss, and then use the fair market value (FMV) for figuring a loss and have a gain, you have neither gain nor loss on the sale or disposition of the property.
Adjust the cost basis to reflect $0 gain/loss on the sale of the investment. Retain of record of your correction entry should a tax authority have a question about the transaction at a later time.
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