Great Jimbell42! WMI stock may be ok, but not to defray capital gains.
If I understood correctly, this distribution was going to be tax free to recipient even if it's made out in cash?
I understood that Steinberg was very articulate about this aspect and Judge Walrath repeated this as well.
The distribution was to be treated as "return of capital" since the whole case is predicated on the notion that Anchor's capital was wasted on the purchase of failing banks.
The goodwill in the balance sheet was recorded for the overpayment that Anchor made to purchase the failing banks from the FDIC. Anchor listed the overpayment as "goodwill" - an asset not very much respected in the accounting world, but allowed under the prevailing regulations, and was even counted as a valid Tier asset.
By later, changing the law, and disallowing this maneuver, the FDIC caused the demise of Anchor. Therefore, this litigation award is a "return of the capital" that was squandered based on bad regulatory advices and not taxable to the recipient (us).
Someone correct me if I'm wrong. The 2000 letter distributing the LTWs mentioned it as well, but referred holders to their respective accountants for advice.
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