Visitor I

Shareholder Litigation Settlements

Last year I received (3) checks as my pro rata share of different stockholder litigation cases.  The two largest are noted as "Qualified Settlement Funds".  Did not receive a 1099-Misc or any other tax reporting documents.  Just the usual language with the check that determining tax treatment is recipient's responsibility.  I had filed proofs of claim, but was not otherwise directly involved in the cases.

 

In past years, I have received similar settlements of small amounts, and plugged them into "Other Income" for simplicity.  In all cases, the stock has long been sold and the gain or loss taken in the respective years.

 

This year, the total is more significant, so wanted to confirm how to account for it.  From looking at TTax and otherwise online, seems to be divided opinion between (a) doing the Other Income treatment, and (b) creating a Schedule D transaction with zero cost basis to reflect proceeds as cap gain. 

 

Other folks have experience on this one?  Thanks