market timing Awards

[taxquestion]

Many clients have received checks- from mutual fund companies - The explanation is it is a distribution from the fair fund established by the SEC in connection with the administrative proceeding for unfair market timing-

How do we handle this for tax purposes

[gkaiseril]

Which way is the wind blowing in the U.S. Tax Court?


See the letter from the Coalition of Mutual Fund Investors dated February 6, 2008 to The Honorable Christopher Cox, Subject: Taxation of SEC Fair Fund Payments

"In general, the IRS is taking the position that these distributions will either require
an adjustment to an investor's cost basis or be treated as taxable income for any investor
not in an Individual Retirement Account (IRA) or other tax-deferred investment structure."

http://www.investorscoalition.com/CMFILettertotheSECreTaxationofDistribPayments2608.pdf