Taxability of payment from a Qualified Settlement Fund (QSF) for mutual fund fraud


N

Nathan Liskov

I just received a distribution payment from the Fair Fund
established by the Securities and Exchange Commission
established to compensate investors injured by market timing
in Pilgrim Baxter (PBHG) funds during June 1998 to Dec 2001.

Does anyone know how to handle taxes on this payment?

I have long since sold all my PBHG funds. At most, I would
expect this payment to be equivalent to a long term capital
gain as it would have lowered the basis in the funds when I
did sell them.

I have no idea what tax schedule I should use to report this
payment.

There is some tax info at www.pbafairfundsettlements.com
that implies that if one still owed the mutual fund, one
could lower the basis by the amount of the settlement. But
there is no info on what to do if the fund had already been
sold. Also, I got several checks as I owned several funds,
but no indication which check when with which fund.

Thanks for any inputs

Nathan Liskov
 
Last edited by a moderator:
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B

Benjamin Yazersky CPA

Nathan Liskov said:
I just received a distribution payment from the Fair Fund
established by the Securities and Exchange Commission
established to compensate investors injured by market timing
in Pilgrim Baxter (PBHG) funds during June 1998 to Dec 2001.

Does anyone know how to handle taxes on this payment?

I have long since sold all my PBHG funds. At most, I would
expect this payment to be equivalent to a long term capital
gain as it would have lowered the basis in the funds when I
did sell them.

I have no idea what tax schedule I should use to report this
payment.

There is some tax info at www.pbafairfundsettlements.com
that implies that if one still owed the mutual fund, one
could lower the basis by the amount of the settlement. But
there is no info on what to do if the fund had already been
sold. Also, I got several checks as I owned several funds,
but no indication which check when with which fund.
Most likely it will be reported on sch d, probably as a long
term capital gain.

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----

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