Tax Issues

We cannot give individual noteholders tax advice because we do not know their individual situations and because we have not undertaken to investigate the precise tax implications of the settlement on noteholders. Below are a few general comments on tax issues that you may wish to take into consideration.

The settlement is expected to return 85% of your money to you. Generally speaking, when a person recovers lost money no taxes are owed because it was that person's money in the first place. If in the end the recovery falls short, that shortfall can then be reported as a loss. How that loss is treated for tax purposes is complex and your tax professional would need to deal with that. (If you have already reported a loss, however, recovering your money would reverse that loss and you may need to pay taxes -- but only if you already wrote off the loss.)

Some folks had IRA's with Sterling Trust. See the page on this website entitled "Sterling." If you take your money out of an IRA you will have 60 days to reinvest it or else you will lkely have to pay taxes on it. Again, the rules for that situation are complex and your individual situation will affect the outcome, so our general comments should not be taken as tax advice.