Catherine Posted March 24, 2010 Report Share Posted March 24, 2010 Hi folks -- plodding through taxes all day despite an absolutely splitting headache. This client got a couple hundred $$ from a securities litigation settlement. Stocks held are in a regular account, not an IRA of any kind. Still owns all shares; hasn't sold a one since the original purchase several years ago. So far as I can think at the moment (which isn't far, let me tell you), this isn't ordinary income but rather a basis adjustment and should be on Sch D rather than Line 21, yes? But -which way- does the adjustment go? Basis addition, because it's getting taxed in 2009? Yes? I tried putting a cold cloth on my head but it just steamed all the cold away in about two seconds.... thank you all. Quote Link to comment Share on other sites More sharing options...
mcb39 Posted March 25, 2010 Report Share Posted March 25, 2010 Hi Cath......you have my sympathy. I had that last week. This week is a croupy cough. Anyhow, I just finished a return for a new client. Last year, the preparer put on Line 21 Enron Litigation Settlement. This year she had some from Enron and some from AOL Time Warner. I put them both on Line 21 with the wording typed on the Line 21 Worksheet. (Enron Litigation Settlement; AOL Time Warner Litigation Settlement.) Hope this helps you. I never saw this before, but last year she went to a CPA, so I would think they would know how to do it. Quote Link to comment Share on other sites More sharing options...
Catherine Posted March 25, 2010 Author Report Share Posted March 25, 2010 Hi Cath......you have my sympathy. I had that last week. This week is a croupy cough. Anyhow, I just finished a return for a new client. Last year, the preparer put on Line 21 Enron Litigation Settlement. This year she had some from Enron and some from AOL Time Warner. I put them both on Line 21 with the wording typed on the Line 21 Worksheet. (Enron Litigation Settlement; AOL Time Warner Litigation Settlement.) Hope this helps you. I never saw this before, but last year she went to a CPA, so I would think they would know how to do it. Thank you; that makes sense. Catherine Quote Link to comment Share on other sites More sharing options...
jasdlm Posted March 25, 2010 Report Share Posted March 25, 2010 I don't know how to post a link, but hopefully this will help. I know that it is specific to the AIM Fair Funds, but it does reference other, similar settlements. I have been adjusting basis on after-tax money and putting checks issued for IRAs/qualified plans on line 21. Hopefully this is accurate. http://www.aimfairfund.com/files/AIM%20SEI.doc Quote Link to comment Share on other sites More sharing options...
jasdlm Posted March 25, 2010 Report Share Posted March 25, 2010 Wow! Maybe I did actually post a link! Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 25, 2010 Report Share Posted March 25, 2010 It's late (and my son just called to say he's engaged to his longtime girlfriend, so I'm distracted too!) but I think if you still own the stock, you decrease your basis by the amount received, you got a refund of part of your purchase price. If you already sold the stock, I think it's capital gain on Schedule D, with LT or ST maybe based on original holding period; it's additional sales price with no basis, because you used that when you sold the shares. I need to learn this too. Just received an email from a client who dropped off his stuff some time ago: Oh yeah, and I got a check of around $900 from an Enron settlement. Do I have to do anything with it? Now, he remembers it! I don't remember him owning Enron or selling it when it was worth anything and don't remember us taking a loss on it as a worthless stock. However, I used to work for Block, so that might've happened on an old return when he was a Block client. Thanks for all the posts. Quote Link to comment Share on other sites More sharing options...
Catherine Posted March 25, 2010 Author Report Share Posted March 25, 2010 Wow! Maybe I did actually post a link! You did indeed, and I was able to get the document, too. Congratulations! Quote Link to comment Share on other sites More sharing options...
Catherine Posted March 25, 2010 Author Report Share Posted March 25, 2010 It's late (and my son just called to say he's engaged to his longtime girlfriend, so I'm distracted too!) but I think if you still own the stock, you decrease your basis by the amount received, you got a refund of part of your purchase price. If you already sold the stock, I think it's capital gain on Schedule D, with LT or ST maybe based on original holding period; it's additional sales price with no basis, because you used that when you sold the shares. I need to learn this too. Just received an email from a client who dropped off his stuff some time ago: Oh yeah, and I got a check of around $900 from an Enron settlement. Do I have to do anything with it? Now, he remembers it! I don't remember him owning Enron or selling it when it was worth anything and don't remember us taking a loss on it as a worthless stock. However, I used to work for Block, so that might've happened on an old return when he was a Block client. Thanks for all the posts. CONGRATULATIONS on your son's engagement!! Thank you for the response. Funny how things make more sense when your head stops pounding. Eventually I switched to printing stuff until I gave up for the night, but I was worrying that issue like a terrier with a fresh bone and couldn't make sense of it. I could see the pieces, but it was just a jumble. I hate migraines; they really scramble your brain. Catherine Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 25, 2010 Report Share Posted March 25, 2010 Been there, done that. If it's any consolation, we migraine sufferers are usually perfectionists. Tell that to your clients! Quote Link to comment Share on other sites More sharing options...
Catherine Posted March 26, 2010 Author Report Share Posted March 26, 2010 Been there, done that. If it's any consolation, we migraine sufferers are usually perfectionists. Tell that to your clients! Thank you, my friend! Quote Link to comment Share on other sites More sharing options...
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