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Reporting rules require Vanguard to issue Form 1099 if the income produced by the account is $10 or more. Their statement that they will not produce a 1099 fits with your statement that the amount of income is just $9.
Strictly speaking, IRS requires any smaller amount to be reported by the taxpayer even though the investment firm did not produce a Form 1099. As a practical matter, the IRS never checks up on this, as the cost of doing so would be far greater than the additional tax they might collect. The simplest thing to do is simply ignore this income.
If you want to be entirely proper, you can do an allocation. The account became yours at your mother’s death in October. Rounding to the nearest dollar (as IRS prefers), you would allocate $7 to your mother’s final return (if any) and show $2 on your own return. You would be doing this only to satisfy your own desire to be in precise compliance with IRS rules, even as to an item that would not conceivably be of interest to them.
You cannot claim a capital loss on the decline in value of the bond fund prior to its transfer to you, nor would it appear as a loss on your mother’s final return if one is being filed. A capital loss requires a sale or exchange. Death of the owner is not treated as a sale or exchange.