First, A could not possibly have filed an income tax return himself that accounted for everything up through his date of death. His executor could have filed his final return (if one was needed) to do that, of course.
Second, B or C should have notified the mutual fund firm of A's death before they took the distribution. Otherwise, how else does the firm know to make the checks payable to B and C, and if B and C got the checks, why is the income being reported by the mutual fund as paid to A?
The easiest why to deal with this is to ask the mutual fund firm to issue corrected Forms 1099. B and C should, of course, each properly report his share of the mutual fund gains and income received on his federal income tax return. Note that this is NOT a true nominee situation, as A's estate never had control of the distributed funds — A's interest in the account terminated the moment he died. B and C would have been paid directly as the surviving owners of the account.
I have no idea why you even mention a Form 1098 here. That's a form for a mortgage lender to report mortgage interest it received from the borrower during the year. That's not going to be applicable to a mutual fund situation.