Re: question about tax treatment of class-action settlement

In article <bt-46DCA7.10113627092007@localhost>,
bt <bt@xxxxxxxxxxxxxxx> wrote:
I lost money on a stock that was found to have engaged in accounting
monkey-business. The company agreed to a class-action settlement that
will distribute some millions to the affected shareholders. I have no
idea how much I'll get, but assuming I get something, I have questions:
how are payments from the settlement treated for tax purposes? Is it
the same for losses that were claimed as capital losses on my return and
for losses that occurred in an IRA account? And is there some provision
that would allow me to deposit the IRA-related settlement money back
into the affected IRA (independent of normal annual contributions)?


If some or all of the claim was on behalf of your IRA, your claim form
should have been submitted in the name of the IRA. When the check is
received it gets put into the IRA and the custodian should record
it as a dividend paid into the account; no tax consequence.





In your regular account, this is used to reduce basis. If
you sold he stock already, it is recorded as a sale, long or
short term as appropriate.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH
.

Relevant Pages

  • Re: question about tax treatment of class-action settlement
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    (misc.taxes)
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    ... The shares I owned ... were held in an IRA account. ... hundred dollars) to that IRA? ... your IRA custodian and tell them it is a legal settlement for ...
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