my advisor made unauthorized trades. brokerage firm settled finra claim. Is this money taxable

Forum|Forum|8 years ago
March 26, 2018
1 reply
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I recieved a settlement from an online FINRA claim from my brokerage firm. I haven't recieved a 1099 for this settlement or anything. Do I report this money as income or what?

LudwigVan_fan

Employee

This can be complicated. When did you receive the money? Did you receive information that describes what the settlement is for, specifically?

You state the advisor made unauthorized trades. For purposes of this discussion I'm assuming you reported gains/losses on the trades...even if unauthorized?

Generally speaking, funds received as awards, punitive, etc., are taxable. Generally, the major exception is if the funds are related to medical situations (physical and sometimes mental).

Thus, without details, I would have to say the funds are taxable, unless they would meet some specific exception.

**Disclaimer: Effort has been made to offer correct information; but due to the discussion forum limitations, the poster disclaims any legal responsibility for the accuracy of the poster's response**