My CPAs contention is cap gains on escrows.
Since the escrows have been held since 2012 my tax expert feels the payout can be successfully argued that the gain will be taxed as capital gains and NOT ordinary income. Be careful you don't pay the IRS more than you need to. They will get plenty anyway. The first $450K is taxed at 15% and all after that is 20%. This could increase considerably in a hillary administration. Trump will tax all cap gains at 15%.
"How is a holder taxed on its LTI?
Very generally, a holder is taxed as if
directly receiving the income, gain,
deduction or loss on its portion of the underl
ying assets of the Liquidating Trust.
Therefore, a holder must take into account
in the determinatio
n of its own taxable
income for U.S. federal income tax purposes
its allocable share of any income earned
by the Liquidating Trust (other than with
respect to the Liquidating Trust Claims
Reserve), regardless of whether a co
ntemporaneous or commensurate cash
distribution is made to the holder by the
Liquidating Trust."
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