I got two of them this year. Do they go as ordinary income or something else? Seems like a ripoff to me; the stock just goes down by triple the amount of the payments, cause it has to cover all the payments and expenses, so what is the point of it? Except for the lawyers of course.
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I consider mine to be a long-term capital gain, reporting them on Schedule D with zero basis. The litigation typically claims that the shareholder paid too much for the stock, and the payments correct for that. Hence, a capital gain. Long term because lawsuits always take more than a year.
I know. If we're still shareholders, they're paying us with our own money.
Disclaimer: I'm not a tax pro, just a tax payer.
They match the characterization of the stock. If you sold it, they're long or short term as the stock was. If you still own it, they're a reduction in cost basis.
The people who sue don't still own the stock, so they don't care about its value.
Seth
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