I got a check from a class action lawsuit. It says it’s coming from a “qualified settlement fund” as defined in Treas. Reg. Section 1.468B-1 through 5. It also says
‘Under the regulations, “whether a distribution from a Qualified Settlement Fund is included in the claimant’s gross income is generally determined by reference to the claim in respect of which the distribution is made and as if the distribution were made directly by the transferor.” The claims upon which this litigation was based involved allegations of violations of the federal securities laws. The tax treatment of this distribution varies based upon the recipient’s tax status and treatment of his, her, or its investments/’
My tax status is just a “Single” individual. I normally do taxes on my own but wonder how to treat this payment and whether to include it in gross income.