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Subject Author Date
Stockholder litigation payments... Geoff 11-19-2007
Posted by Geoff on November 19, 2007, 6:10 pm
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 I got two of them this year. Do they go as ordinary income
or something else?

Seems like a ripoff to me; the stock just goes down by
triple the amount of the payments, cause it has to cover all
the payments and expenses, so what is the point of it?
Except for the lawyers of course.

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Posted by MyVeryOwnSelf on November 21, 2007, 9:24 pm
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> I got two of them this year. Do they go as ordinary income
> or something else?

I consider mine to be a long-term capital gain, reporting them on Schedule
D with zero basis. The litigation typically claims that the shareholder
paid too much for the stock, and the payments correct for that. Hence, a
capital gain. Long term because lawsuits always take more than a year.


> Seems like a ripoff to me; the stock just goes down by
> triple the amount of the payments, cause it has to cover all
> the payments and expenses, so what is the point of it?
> Except for the lawyers of course.

I know. If we're still shareholders, they're paying us with our own money.


Disclaimer: I'm not a tax pro, just a tax payer.


Posted by Seth on November 22, 2007, 12:24 pm
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>I got two of them this year. Do they go as ordinary income
>or something else?

They match the characterization of the stock. If you sold it, they're
long or short term as the stock was. If you still own it, they're a
reduction in cost basis.

>Seems like a ripoff to me; the stock just goes down by
>triple the amount of the payments, cause it has to cover all
>the payments and expenses, so what is the point of it?

The people who sue don't still own the stock, so they don't care about
its value.

Seth


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