How to adjust 1099-Misc number

[aptiva4tt17]

My brokerage firm filed a claim (on my behalf) in a Class Action litigation on a stock I owned.  Then the brokerage firm received  in Nov 2024 a distribution from that Class Action and send me the distribution -- LESS a 6% fee.  [For illustration purpose, the amount distributed is $100, and the amount I RECEIVED is $94.]

I have sold that securities between the time the claim was filed and the receipt of the distribution.

Now, I received a 1099-MISC from that brokerage firm for the distribution for $100 -- i.e. before the 6% fee.

Since that distribution is related to my investment in a stock, that distribution should be a capital gain.  Also, the amount should be $94, the NET amount.  The 6% fee should be no different than a commission that reduces the sale proceeds.

How do I adjust the 1099-MISC number to $0 and report $94 in Capital Gains?

Thanks in advance.

[DianeW777]

It would seem this could be reported as an investment sale instead of 'Other Income'.  Follow the steps below to enter your investment sale and use the fees as a cost basis. Be sure to use the appropriate holding period of the original stock. Keep the 1099-MISC in your file and if you did enter it you should delete it using the appropriate link below.

• You'll need to delete this form  1099-MISC-.
  • If you're using TurboTax Online software and need to delete a form, click here.
  • If you're using TurboTax Desktop software and need to delete a form, click here.

Holding Periods:

• Long term is a holding period of more than one year (one year plus one day) and receives capital gain tax treatment (0%, 10%, 15%, 20% depending on your regular rate of tax)
• Short term is a holding period of one year or less and receives ordinary gain tax treatment (your regular rate)

To enter your sale in TurboTax, follow these steps. Click this link for more information. Where do I enter Investment Sales?

1. Open or continue your return.
2. Navigate to the investment sales section:
   • TurboTax Online/Mobile: Go to investment sales. If using this application, make sure it is open
   • TurboTax Desktop: Search for investment sales and then select the Jump to link. 
     • Or Personal Tab > Continue > I'll choose what I work on > Scroll to Investment Income > Select Stocks, Cryptocurrency, Mutual Funds, Bonds, Other
3. Answer Yes to the question Did you sell any of these investments in 2024? (or Okay! to Time to kickoff your investments!).
   • If you land on  the Investment sales summary or Your investments and savings screen, select Add More Sales or Add investments.

[aptiva4tt17]

Thanks, Diane, for the response.

Deleting the 1099-MISC may trigger an IRS inquiry.  So, instead of deleting the 1099-MISC, is there a way to enter a deduction, netting to zero; then enter an investment sale?

I am hoping to do it similar to the last post  (by KathrynG3) in https://ttlc.intuit.com/community/taxes/discussion/yes-that-income-should-be-accounted-for-in-your-2...

Enter a negative $100 in Less Common Income.  then report a Investment Sale as you suggested.  It would be LT Gains.  I assume I should check Box F -- for sales not reported by brokers [the broker reported a Misc Income, not an investment sale]?

Would this work?

[ThomasM125]

Yes, that would be an acceptable solution.