Brief explanation of my situation:
My questions:
No, a Form 1099-NEC reports only nonemployee compensation which is not the case for your buyer. Because this is a settlement and not nonemployee compensation, it's best to issue a 1099-MISC to the buyer. Can you request the buyer's SSN and address from the attorney? If not, use the buyer attorney's address, and leave the SSN blank. There is a process on how to handle 1099s without a tax ID. Make a formal request for the number and keep it in your file for the IRS or send it with the 1099-MISC when you send the IRS copy.
You could issue a Form 1099-MISC to your attorney. Because this was post-sale, you are correct, it does not go on Schedule E. Gross proceeds paid to an attorney in connection with legal services (but not for the attorney's services) are reported in box 10 of Form 1099-MISC.
The Form 1099-NEC, you received, in and of itself is considered self employment income reported on Schedule C and this allows you to deduct the expenses you paid out. It will cancel itself out this way but be prepared with all your documentation should the IRS want to check it out later. You didn't actually earn any money yourself in this transaction.