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emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3166
Experience:  IRS licensed Enrolled Agent and tax instructor
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I received a distribution as a result of a settlement of the

Customer Question

I received a distribution as a result of a settlement of the In Re Lehman Securities and it refers to this same reg. I have never declared a loss for these securities (Lehman Notes). Can I use the payment to offset my loss? What is the tax treatment for this payment? Thanks
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

If this is your last and only settlement payment the rest of the investment will be treated as worthless security. You will report the distribution as sales proceeds on Schedule D (form 8949), your purchase date will be the purchase date of the original investment, selling date will be the date on the settlement check and your basis will be your original investment plus brokerage fees.

Expert:  emc011075 replied 1 year ago.

For instance if your purchased the securities 4 years ago for $4500 plus $50 broker commission and last month you received check for $2000, assuming this is the last and only check you will receive, you will report the transaction as followed.

Proceeds: $2000

Purchase date: Oct 25, 2011 (or you can use various if it is more than one year and you don't know exact date)

Cost basis: $4550

Selling date: Sep 25, 2015 (date of the check)

Capital Gain/Loss (2550)

Let me know if you have any questions.

Expert:  emc011075 replied 1 year ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you wit today?

And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.