How to handle a previous year stock loss settlement on current tax return?

This comes under the "tax benefit rule." The amount received is current-year income up to the amount by which the loss deducted in the prior year reduced your tax. This is fairly complex to figure. 

See IRS Pub 525, page 24 "Recoveries" https://www.irs.gov/pub/irs-pdf/p525.pdf

What I might suggest is that if the amount isn't huge see how much additional tax adding it as if it were a sale of the stock in 2023 costs you. (Enter it manually as if you received a 1099-B for it -- but do indicate not 1099-B was not received, unless you got one.) If additional tax is zero or low (there is a zero percent capital gains bracket depending upon your other income), then just include it. 

If the additional amount is significant, then I would go back to your return for the year of deduction and remove that loss. See how much additional tax you owed without the loss. (Do that for each year forward if your capital loss was limited to $3k). If the 2023 extra tax is more than that, adjust the stock sale to reflect that. [This is super easy to do using the downloaded software version of TT. I don't know how easy it is to do in the online/cloud version.]

So, as you can see, if adding it in as a capital gain in 2023 doesn't cost much, that is the easy way to handle it.