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To: JHR who wrote (83123)	12/31/2000 12:00:09 PM
From: Telemarker	Respond to of 95453

Hi JHR. I'll have a go at that one. Answer: If you have already disposed of the security to which this settlement relates, I think that the proceeds should be treated as capital gain and as such reflected on your Schedule D with a holding period equal to that of the relevant security. If you disposed of the security in a prior taxable year, I'd enter these purchase and sale dates on the Sched. D line, along with a description to the effect "litigation proceeds XYZ co., prior year sale" If you're still holding the security at the end of this year I'm not sure of the answer at this point - let me know, it may be a nontaxable return of capital. Reg. Section 1.468B-4 from which they were kind enough to recite a sentence for you gives an example of distributions in compensation for sickness or injury as not being includible in gross income. Also, it is stated that if the distribution is in satisfaction of a claim for foregone taxable interest, the distribution is taxable as interest income. One looks to the tax character of the underlying assets and nature of the claims to determine taxability and tax character of the distribution. My answer has assumed that the distribution is in substance merely the partial restitution of a capital asset for you. Let me know if there are any facts you deem relevant in light of the above. Hope this helps. Happy New Year.

To: JHR who wrote (83123)	12/31/2000 12:19:56 PM
From: Telemarker	Respond to of 95453

Sorry JHR. Just focused on the fact that your distribution wasn't specific to any one security. I believe that this litigation had to do with investors getting screwed on spreads. If that's the case, it appears clear that the funds you received are capital in nature. I'd put it in the long-term part of your Schedule D, unless most or all of your stock transactions are short-term in which case you may be stuck with short-term treatment. Technically, perhaps some type allocation of the amount received would be in order, but hey..... Regards