text: on class action securities settlements, what is the tax treatment? i have been awarded $ from a securities complaint vs securities firm.  can this award be posted in sch d as a gain since the loss was deducted from a securities transaction in schd? recoveries are taxed in the same manner as the item they are intended to replace. thus, if the award is to compensate you for a decrease in the share price, it would go to schedule d. if the recovery is to replace lost dividends, the recovery would be taxed as a dividend.