club_cafe: How to handle lawsuit income

iras1 on

In a message dated 1/15/2005 6:05:35 P.M. Eastern Standard Time, jmunn1@nycap.rr.com writes:

John asks Ira...

Ira...

Wouldn't the determination of short/long term gain be based on how long
you've held the stock? You replied that it's a long term distribution,
but would that not assume the stock's sale was also a long term
holding? I would think that if the stock was a short term gain/loss
then the lawsuit proceeds would be a short term gain. Mind you, I don't
know... just a guess on my part.

The reason the distribution is a long-term gain has nothing to do with the holding period of the stock which was sold. It has to do with the length of time between the original purchase date and the receipt of the settlement. I'm not aware of many (any?) class-action suits that have settled within one year.

Ira Smilovitz

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