Tax Tips Be careful victims Madoff IRS two solutions for your make up for losses

Tax Tips Be careful victims Madoff IRS two solutions for your make up for losses

Have you or someone you know get scammed by the famous Bernie Madoff, current king of Ponzi schemes? If so, you might have some appeal for your losses on tax filings. If you are from what has happened is embarrassing, you might try to seek treatment deposit deduction. But enough is known about the filing of tax returns and modified to respond to questions like these:

Go back and change your first income tax year, reversingall incomes who have asked the paper fraudulent statements to you?

And if some of these early years are "closed" for you now, because they are past the statute of limitations, which allows you to file an amended tax return?

Once you know the amount you lost, you know how the loss can be calculated a question?

You know the difference between a lost or stolen IRS IRS capital loss?

Solution 1: the loss theftDeduction

Well, the IRS felt your pain this year decided to help. Really! The IRS issued Rev Proc 2009-20, shows "safe harbor" rules for the treatment of "Ponzi" programs like Madoff. Following this ruling, these systems are entitled to a 165 theft loss deduction under IRS Code Sec. In addition, IRS identified Rev Rul 2009-9, found that the theft loss is deductible for the year it is. It means that there is no need to change again andYour return before? Well, yes and no.

Before you know the answer, you must determine the amount of theft loss. According to the IRS Code Sec 165, the amount of the deduction amount of the loss of theft is that you have invested directly Madoff, net of amounts withheld, including repayments. More importantly, the deductible amount also includes all notional income that the investor has been reported in the years before the discovery of the theft, which was contained inInvestor's gross income and then invest in the system. Well, sounds easy enough, until you determine this: to what extent investor creates a theft loss deduction, or increases due to an operating loss for the year of loss is removed, then the investor to take back the loss of up to three years and carry forward losses for up to 20 years. Great. What should I do next, when, three years passed amending the tax return to collect more than the theft lossDeduction?

Solution 2: "Credit Capital Loss"

What if you have invested indirectly Madoff? You know the "feeder" investment funds, Bernie, the use of fraud of thousands of people like you. These losses do not qualify for the theft loss deduction. According to the IRS, you have a capital loss incurred. Capital losses can only be applied against any capital gains. You can also deduct up to $ 3,000 against other income. Losses on capitalare useful and the limit of $ 3,000, which we expected in the coming years. You have the experience and technology to calculate and properly implement this type of information? Would you really have to manage all this yourself?

Now that you know, the regulation of the IRS 's two ways you could draw Ponzi, like some of your losses in Bernie Madoff / I encourage you or the victim know the CPA (to work with an experienced tax preparer or Certified Public Accountant )For all the tax breaks you deserve.

It is always easier to avoid errors in fact correct. Collaboration with an experienced tax preparer or CPA, you can protect against such errors. The best lesson is to NEVER deal with anyone that you have to check into an investment to write a company directly or ask their control. But you already knew that not true?

These interviews are part of our overall strategy, our servicesNCH Wealth Advisors clients. Please contact our office if you have any questions: 714-459-7020. We are pleased to contribute to the sense that you need.

Feel free to forward this along to anyone you think might benefit from this information occur. We welcome all referrals.

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