1099 Line Item: Reconciliation and Cost Basis Adjustment?

Form 1099 (from Vanguard) includes an entry under “RECONCILIATIONS, FEES, EXPENSES AND EXPENDITURES”: Other Receipts & Reconciliations- Basis adjustments -85.61

And, a note later in the 1099: ”-85.61 Total Increase to cost basis”

This is related to the fact/situation where the investment account received a dividend from a mutual fund that was $85.61 LESS than the dividend amount declared on the 1099. So, consistent with the mutual fund holding back $85.61 to plow back into the fund capital/operations.

Question #1:

I think that the cost basis should INCREASE by $85.61 since the amount invested went up, not down. So, the 1099 note really means that there was a reconciliation of negative $85.61 (because cash received was less than it should have been) with the correct action being to record an “Increase to cost basis”. Agreed?

Question #2:

Vanguard does not include in Holdings any $85.61 cost basis adjustment, up or down. Investor must keep these records, I suppose. So, subsequent sales transactions will not have the true cost basis (including $85.61 adjustment) on that 1099. How does one report to the IRS a cost basis number that differs from the 1099?

Thanks.