It probably doesn't really matter. 🙂
I would probably put it on the 1040.
In this case, since there is no estate, who pays the taxes? If filed on 1040, spouse would have to pay the taxes on loan that she was not legally liable for to begin with. The offset reduces the amount of the TSP account so in theory, the spouse is being penalized for the loan.
If the spouse files a Joint return, the spouse is claiming responsibility for the amount owed. Otherwise, it would would come from his assets ... which would effectively mean it is coming from the spouse anyways.