If a taxpayer accuses their stockbroker of mishandling an account, specific IRS rules apply. Learn more about this unique situation below.

The IRS has privately ruled that an amount taxpayers received under a settlement agreement with their stockbroker after they accused him of mishandling their account was properly reportable as capital gain rather than as ordinary income.  The IRS ruling specifies the loss recovery takes on the same character as the original losses, and therefore is treated as a long-term capital gain on Schedule D rather than ordinary income.  (PLR 200724012)