What's the earliest we can expect to see money?
That's not yet known, but I wouldn't count on it coming too soon if I were you. According to Prosper's public statements, the first installment is to be paid shortly after the judge gives preliminary approval. However, I'm skeptical that is correct, because preliminary approval is not even close to the end of the process, and I can't imagine Prosper would pay $2M on a settlement that could easily blow up after the payment. Typically, payments do not commence until after FINAL approval, including any appeals.
Preliminary approval could possibly come several weeks after a settlement agreement is fully drafted and agreed upon by the parties (which will likely take several months). So I doubt preliminary approval will be sooner than 3 months, and may well be substantially longer -- that mostly depends on how close the parties are to hammering out the details of the settlement agreement.
Final approval in the trial court is likely to be at least several months after preliminary approval -- notice will have to be given to the class, time provided for objections and opt-outs, and a court hearing held. And if anyone appeals approval of the settlement, that appeal would likely take 18 months or so (and the losing party could appeal again to the CA Supreme Court, although it accepts few cases, so that likely would add only a few months).
Also, for those of us with large losses, will the settlement money be taxable, assuming we get more than $50 buck.
I'm pretty sure it would be. After all, you already deducted your losses, so if you now get partially reimbursed, I don't see why that wouldn't be taxable. But Cubbies can provide a more definitive answer.