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Posted by curiousgeorge408 on May 28, 2008, 11:42 am
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In 2007, my mother sold shares of a REIT that had been
held for 15+ years. The conditions of the sale state:
"These units will trade for the referenced price less any
distributions, settlement proceeds or tax credits after the
date of sale, even if attributable to periods occurring
prior to the date of sale".
In 2003, a class action suit was settled, resulting in
payment to the members of the class, including my
mother. The settlement is being paid over time. However,
the claims administrator "will not accept changes for
sales of any units. If you sell any of your units and
transfer your right to receive future distributions from the
settlement proceeds, it will be your obligation to make
arrangements to convey any future distributions to the
purchaser of your units".
My mother just received the 2008 installment payment.
According to the terms of the sale, we will make
arrangements to assign the payment to the purchaser.
However, since the units traded "for the referenced price
less any ... settlement proceeds ... after the date of sale",
it seems that we can report the assigned payment as a
cost ostensibly offsetting the net proceeds of the sale.
Is that right?
If so, how do we do that? I mean, what are the mechanics?
Obviously, we already reported the sale of the REIT on
Sched D for the 2007 tax return.
Do we have to file an amended 2007 tax return to reduce
the net sales proceeds by the settlement installment?
What if future settlement installment payments occur
after the statute of limitations for amending 2007 tax
returns?
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