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Class Action suit

Technical topics regarding tax preparation.
#1
jon  
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minnesota
Client is retired and traveling the country after getting a divorce. His X called him and is sending him two checks and some information she received in the mail. Client became the "Day Trader" for a couple of years back in the late 1990s and really lost money. capital loss carryforwards are around $230,000 and the first check is made out to both the X and him for about $23,500. She says that was his because it took place before their marriage. So in 2019 I will record it as a long term gain.

The second check is made out to his IRA account for $43,500. I told him to get it back into your IRA. He said he got desperate when trading and did use and lose IRA moneys.

DHB Class Action - Remission is where it is coming from. DHB is David H. Brooks, It says amount is as a result of the Class's Settlement approved in 2008, and then more approvals after that...

Is there anything more I should know or find out.

Thanks.
 

#2
jon  
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Does anybody have any advice on this. Brooks died in prison in 2016. Protective vests(government contracts) was his company, it was publicly traded and he manipulated the stock, and misuse of the company's assets.. I did not read the entire case, but it was a nice surprise for my client. Client said he lost a bunch on it, obviously. If 1099ed how do I record without having it hitting line 21 - used to be there.

Thanks
 

#3
HowardS  
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Jon...a quick read of the settlement says the restitution to investors covers about 90% of their losses so origin of claim would apply, cap gains to offset losses claimed. Contact the IRA custodian so that the monies returned are not treated as a contribution.
I suffer from depreciation.
 

#4
jon  
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Thanks Howard
 


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