I received more than $10,000 in a 2011 distribution from the Schwab YieldPlus Settlement Fund. Is all or part of this taxable income? If so, where is it reported on Form 1040?
I did not receive a 1099.
According to Settlement Fund customer service, they did not file any reports with the IRS or send 1099s to recipients. And they insist that they cannot offer tax advice -- of course.
I spoke with a tax advisor by phone who is unfamiliar with the distribution. He is not sure if it is taxable. He offered some general guidelines for how to handle it, basically leaving it up to me: be conservative and report it; or keep my head down and see if the IRS notices.
I would like to hear from someone who is familiar with the distribution; specifically, how you handled it either for yourself or for clients.
I am __not__ interested in generalities about how to handle settlement distributions and general conditions for treating settlement distributions as taxable income. I got that from my tax advisor. I read Pub 525. I believe I already have a good __general__ understanding.
I believe the key is to determine what the distribution represents, e.g. return of capital, unpaid interest, dividends or capital gains, punitive damages, etc.
In other settlement distributions that I've dealt with, that was clear from the documentation.
But this time, it is unclear to me what the distribution represents, despite all the documentation sent to me before and at the time of the distribution.
(I do know that the distribution does __not__ represent unpaid interest or dividends.)
As I said, I am interested in hearing from someone who has dealt with this particular distribution.
But if you need more details, see the information at