class action securities settlement distribution

Forum|Forum|1 year ago
January 18, 2025
1 reply
15 views

This year I received a distribution from a securities settlement pointing to stock loss I took in 2018. The settlement distributor does not issue tax docs. I’m unsure how to enter this into TurboTax and found 3 options and I’m hoping someone can point me to the correct treatment and how to enter it into TurboTax.

First option, treat as Long Term Capital Gain (enter sales amount and purchase at zero?).

Second option, the distribution offsets against drawing down the capital losses carryover for the full amount so no net taxes due (does max $3000 apply? – how to enter this?).

Third option is book it as ordinary income (book it as Other Income?).

Which is the appropriate option that I should use? It’s confusing and any guidance is appreciated!

RobertB4444

Level 15

Since this settlement is replacing a loss that you already took on your taxes in 2018 then the income should be the same as the deduction that you took. So a capital loss in 2018 should be a capital gain in 2024. Sale date of the date that you received the settlement, sale price of the amount received, basis of zero.

@ivohofstad1

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