Can I categorize 1099-misc settlement money received as Capital Gain (greatly preferred), or is the money taxed as Ordinary Income?
Here’s the situation: In 2012, we invested in a currency tradinginvestment opportunity, which turned out to be a scam. When the company notified us the investment money was gone and could only be partially returned, we withdrew our funds and showed a short-term capital loss of -30k in 2012. To our surprise and delight, in 2023 (11 years later), we received a lawsuit settlement check for 16k and a 1099-Misc form. Additional tidbits: From 2012 to 2023+, we continue to have short-term and long-term capital loss carryovers, for which we can only claim a $3k loss per year. I’m hoping the 16k settle money can be shown as long-term Capital Gain.