Declaring Class Action Settlement?


J

Jeff Wisnia

Five years ago I sold some shares of stock at a loss and
summed that loss into my 1040 Schedule D capital gains for
that year.

In 2006 I received a settlement check for about $800
resulting from a class action suit against the company whose
shares I'd held.

Is it proper for me to show that settlement payment amount
as a long term capital gain for 2006? If not, how should it
be declared?

Thanks,

Jeff
 
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B

Benjamin Yazersky CPA

Jeff Wisnia said:
Five years ago I sold some shares of stock at a loss and
summed that loss into my 1040 Schedule D capital gains for
that year.

In 2006 I received a settlement check for about $800
resulting from a class action suit against the company whose
shares I'd held.

Is it proper for me to show that settlement payment amount
as a long term capital gain for 2006? If not, how should it
be declared?
long term capital gain is correct

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----
 
Last edited by a moderator:
S

Seth Breidbart

long term capital gain is correct
Even if it was a short-term capital loss when sold?

Seth
 
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B

Benjamin Yazersky CPA

Even if it was a short-term capital loss when sold?
its a recovery of an item previously deducted on a prior
year's tax return so the recovery takes on the same status

if it was a short term capital gain or loss, then the
recovery is a short term capital gain

if it was a long term capital gain or loss, then the
recovery is a long term capital gain

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----
 
Last edited by a moderator:

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