Tax treatment of settlement of Lehman Brothers Equity/Debt Securities Litigation suit

Treat it as you would the proceeds from a stock sale that was long-term. In other words... the check is your proceeds; your basis is zero; date of purchase is "Various"; date of sale is check date; holding period is Long.

Alan,

Could you elaborate on the long term treatment, since my ownership of the underlying security was only 7 months, and its earlier sale was short term? Also, why "various" for purchase date since there was a discrete date of purchase of the security and should I list the litigation company who actually sent me the check as the source of the income or refer to Lehman's in any way? These transactions really are confusing..I got thru to the IRS today and the rep said they weren't trained for this kind of settlement. I don't understand why the litigation company doesn't send you some kind of 1099 for this. Do they send the government anything?

The use of Various defaults to long-term in software. Feel free to use the actual date. Has it been more than a year since you bought the securities?

I assume you are saying this is how it works in OP's software.

UltraTax defaults Various to S-T.

Yes, it was bought and sold it within the same year (2008). As a general rule with these settlements, do you mimic the holding period of the stock that was in the class action when you report it? And what is the description/payee? The litigation company who actually sent the check, or the company who lost the class action? I've got a ton of class action suits in progress,or at least i've filled in documentation for them, and it would be really helpful if I had a formula for reporting future settlements, should they occur.

Arthur Kamlet wrote: : In article , : Alan wrote: : >On 4/9/14, 9:08 PM, jo wrote: : >> On Wednesday, April 9, 2014 12:56:11 PM UTC-4, Alan wrote: : >> : >> Could you elaborate on the long term treatment, since my ownership of : >the underlying security was only 7 months, and its earlier sale was : >short term? Also, why "various" for purchase date since there was a : >discrete date of purchase of the security and should I list the : >litigation company who actually sent me the check as the source of the : >income or refer to Lehman's in any way? These transactions really are : >confusing..I got thru to the IRS today and the rep said they weren't : >trained for this kind of settlement. I don't understand why the : >litigation company doesn't send you some kind of 1099 for this. Do they : >send the government anything? : >> : >The use of Various defaults to long-term in software. Feel free to use : >the actual date. Has it been more than a year since you bought the : >securities?

: I assume you are saying this is how it works in OP's software.

: UltraTax defaults Various to S-T. : --

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

I have not been able to use various with turbo Tax. Has anyone found a way?

Wendy Baker

Alan, I'm running into some issues with the transaction dates in Turbo Tax. How do I correlate the settlement/pay date of the class action, which was long after the sale of the underlying security, with this sale (do I even need to?)? If I put in the date I received the proceeds (2013), and use the original purchase date of the security, it becomes a long term gain. That seems to conflict with my having reported this as a short term loss back in 2008.

If I use the purchase/sale dates of the security itself, I get back my short term gain status, but it seems questionable because it then no longer is a 2013 transaction. Am I supposed to treat the partial recovery of the 2008 sale/loss consistent with how it was reported then , or do the dates of the settlement override everything and change it into a long term event? I can use various for the purchase date, and the check date as the sale date, as you originally suggested, to make it consistent with a 2013 event, but it does push it into the long term category and i'm not sure that's correct.

Some software interprets v (or if case sensitive, V) as various, but try entering va and it doesn't recognize you.

I don't know how how to make this more clearer. What year did you receive the settlement check? What year did you buy the securities? Has it been more than one year between the two dates? If yes... you have a long term gain. Enter the data any way you want into your software app as long as the result is long-term. The US Treasury could care less how you actually enter the data for this transaction.

You could have made it completely clear by telling me that it is a long term transaction regardless of the fact that the original loss that I took was short term (which I did tell you- 2008 for both buy and sell), and that the holding period for this settlement transaction has nothing to do with the original transaction's holding period. Entering it into the software is no problem as long as I understand the principle. I was under the impression from some source that settlements like this were taxed in some way that balanced out the original ST loss treatment. Apparently that's incorrect, and that's all I needed to know. Annoyance does nothing to educate anyone.