Whether or not that is an accurate reporting will go back to the facts and circumstances of the ownership of the property. The ownership of property is a matter of state law and the IRS (or Tax Court) will look to the applicable state law to determine who legally owned the property. You may want to consult a local attorney if you are not certain as to the ownership of the property.
Of course, issuers of Form 1099 do report to an incorrect person on a somewhat regular basis and often an entry on the tax return, as you suggest, is used to prevent a computer generated notice due to the 1099 as it was reported. In a sense this would not be an accurate reporting; but may be the only resort if the 1099 will not be changed by the issuer.
In order to prevent a mismatch by the computer the Schedule D would have to list the amount on the 1099-S as sales proceeds. Depending on the software used there may be several ways to list it as no realized gain (such as personal loss not deductible) ; but you can possibly use a cost equal to the proceeds to show zero gain regardless of software.
The best and most accurate reporting is for the information documents to be corrected to properly reflect the substance of the transaction. That may or may not always be possible to achieve.