Do I need to send my attorney a 1099 if they were paid directly in a settlement but I got a 1099-Misc box 3 (other income) from the other party who paid the attorney the full amount of the settlement (via check payable to the attorney) if I claim the settlement as $0 net income (gross amount offset by the attorney fees)? This is for an action related to a rental property (Schedule E).
According to Pub 525:
If the qualified settlement income was received in connection with your trade or business (other than as an employee), you can reduce the taxable amount of qualified settlement income by these expenses.
...
The statement must identify and show the gross amount of the qualified settlement income, the reductions for the amount ... allowable as legal expenses not reported as a miscellaneous itemized deduction, and the net amount.
So if I'm making a statement, do I need to supply a 1099 to attorney for the fees they got directly via a check payable to them and for which I received a 1099-Misc?
