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Posted by Seth Breidbart on December 29, 2006, 8:07 am
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> I own shares of a publicly traded company, some of them are
> in an IRA, and some are in a conventional account. I have
> owned these shares for several years.
>
> A lawsuit against this company, for material
> misrepresentation of the value of the company, was settled.
> I just received a few hundred dollars split into two checks
> (one for each of the two accounts).
>
> Anyone care to venture an opinion on how to treat this
> income? I still own these shares.
>
> I'm guessing that I should declare the check for the IRA
> shares as ordinary ("other") income.
Then it's also a withdrawal from the IRA; I'd guess you
should deposit it into the IRA.
> How do I treat the check for the non-IRA shares? It's kind
> of galling to have to treat it as ordinary income when the
> shares on which it's based have a considerable unrealized
> capital loss.
I'd consider it an adjustment to basis.
Seth
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