I am not sure you fully understand her situation.

You will never have to pay gift tax if you are merely a donee. My feeling is that IRS mistakenly treats her entire proceeds as capital gain as you did not report your gift. Normally, the donee of such a gift should assume the donor's cost basis. And I don't understand why she does not report such capital loss if she indeed sold it below the price you originally paid. As for your check, I would not lose any sleep on it.