How to report cap loss due to settlement?

In 2007, my mother sold shares of a REIT that had been held for 15+ years. The conditions of the sale state: "These units will trade for the referenced price less any distributions, settlement proceeds or tax credits after the date of sale, even if attributable to periods occurring prior to the date of sale".

In 2003, a class action suit was settled, resulting in payment to the members of the class, including my mother. The settlement is being paid over time. However, the claims administrator "will not accept changes for sales of any units. If you sell any of your units and transfer your right to receive future distributions from the settlement proceeds, it will be your obligation to make arrangements to convey any future distributions to the purchaser of your units".

My mother just received the 2008 installment payment. According to the terms of the sale, we will make arrangements to assign the payment to the purchaser.

However, since the units traded "for the referenced price less any ... settlement proceeds ... after the date of sale", it seems that we can report the assigned payment as a cost ostensibly offsetting the net proceeds of the sale.

Is that right?

If so, how do we do that? I mean, what are the mechanics?

Obviously, we already reported the sale of the REIT on Sched D for the 2007 tax return.

Do we have to file an amended 2007 tax return to reduce the net sales proceeds by the settlement installment?

What if future settlement installment payments occur after the statute of limitations for amending 2007 tax returns?

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curiousgeorge408
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