Question: on class action securities settlements, what is the tax treatment? I have been awarded $ from a securities complaint vs securities firm.  Can this award be posted in Sch D as a gain since the loss was deducted from a securities transaction in SchD?

Answer: Recoveries are taxed in the same manner as the item they are intended to replace. Thus, if the award is to compensate you for a decrease in the share price, it would go to Schedule D. If the recovery is to replace lost dividends, the recovery would be taxed as a dividend.
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