Kokua Line: Is Kalima class-action check taxable?

Apr. 10—Question : My mom received a settlement check from the Kalima v. State of Hawai 'i class action lawsuit. She has not received any other document, including a 1099, that indicates any state or federal taxes she might have to pay. Does that mean she doesn't have to report the money ?

Question : My mom received a settlement check from the Kalima v. State of Hawai 'i class action lawsuit. She has not received any other document, including a 1099, that indicates any state or federal taxes she might have to pay. Does that mean she doesn't have to report the money ? I'm especially worried that many recipients may have already spent their checks and will be devastated if they have to find the money to pay taxes on that settlement. Do you know anything about the taxable nature of the settlement ?

Answer : A law firm advised the claims administrator that it was reasonable to treat settlement payments as "presumptively excludible " from gross income, and not issue 1099 statements, while urging recipients to seek guidance specific to their various situations.

"Our opinion is that the Claims Administrator is not required to issue IRS Forms 1099 to class members or to withhold amounts for federal income taxes from the class members' settlement payments. Our conclusion is that the settlement payments can be characterized as tax-free reimbursements of previously paid land rent or as a tax-free return of tax basis with regard to amounts paid on account of land mortgage payments and construction costs. We encourage class members to discuss with their own tax advisers to determine if their particular situations may cause some or all of their settlement payments to be subject to federal or state income tax, " says the letter from Robert W. Wood of San Francisco-­based Wood LLP Attorneys at Law.

For example, a settlement payment could be taxable if it exceeds the amount a recipient previously paid for land rent during the settlement period, the letter said.

Read the letter at and the opinion it was based on at. The opinion is from the Wood law firm.

The Kalima lawsuit website, kalima-lawsuit.com, answers common questions about the $328 million settlement for plaintiffs who waited decades for leases from the Department of Hawaiian Home Lands, but it says one answer can't cover federal and state tax consequences for all recipients.

"Answers as to tax treatment of payments depend on each Class Member's circumstances and actions taken while he or she waited for a lease award, whether dealing with residential or agricultural leasehold property and /or whether incurring construction costs. The issues are unique to every individual and no single response can be provided, " it says.

Initial payments for living class members were mailed on Nov. 21, the website says. Payments for deceased class members must go through probate and have yet to be issued.

Q : The recent tragedy in Baltimore Harbor is unlikely to happen here, if only because we don't have bridges over the harbor entrance. The New York Times compared the size of various containerships. The Dali, the ship in Baltimore, is about 984 feet long and 157 feet wide. And there are larger ones out there. So, my question is what is the size of the largest containerships allowed to enter Honolulu Harbor ? Or perhaps the size is governed by the depth of the harbor rather than the length of the ship.

A : "The largest containerships that call Honolulu Harbor on a regular basis are 965 feet in length and 105 feet wide. To put this in perspective, these vessels have a carrying capacity of roughly half that of the vessel Dali. Vessel sizes are restricted by various sources such as depth of water, width of channels, maneuvering capabilities, and weather conditions at the time. Larger vessels can and have called (at ) Honolulu Harbor, but each vessel is vetted on a case-­by-­case basis, " Dre Kalili, the state Department of Transportation's deputy director for harbors, said in an email.

The Dali, the cargo ship that hit the Francis Scott Key Bridge on March 26, causing the bridge to collapse, weighs more than 116, 000 tons when fully loaded with thousands of containers, according to the news story you mentioned. But that's less than half the tonnage the largest containerships can hold, it said. At 1, 312 feet long and 200 feet wide, the MSC Irina is the largest containership in the world, it said.------Write to Kokua Line at Honolulu Star-Advertiser, 500 Ala Moana Blvd., Suite 7-500, Honolulu, HI 96813 ; call 808-529-4773 ; or email kokualine @staradvertiser.com.------