Word: ponzi
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Internal Revenue Service Commissioner Doug Shulman reached out to thousands of Ponzi victims Tuesday by issuing new guidelines for filing tax theft loss deductions...
There's no unanimity about what to do in regard to Ponzi and other fraud recovery when it comes to taxes. Ponzi survivors are getting a litany of mixed signals from bulletins, tax-adviser reports, panel discussions and the Web. And to make matters worse, many of those trying to get their tax returns in quickly are being slow-danced by their former feeder-fund managers, who, under advisement, have been slow in sending out amended statements, or K-1s; they have until Oct. 15, the final deadline for 2008 filings. (See a TIME video from outside the courthouse...
...second is a "phantom income deduction," which allows you to remove the Ponzi income going back three years. But if you still have a loss, you can carry it forward (i.e., apply it as a deduction against future gains) until the full loss is made...
...third option, a "claim of rights credit," is most beneficial, he said. It allows victims to claim a credit on their 2008 tax return for all taxes paid on Ponzi income going back to the first investment year. The catch, according to Tipograph, is that "it's never been tested in regard to Ponzis." This option is typically used in insider-trading cases, when tax monies need to be returned. (See 25 people to blame for the financial crisis...
Late last month, two Senators and three Congressmen sent a two-page, single-spaced letter with 10 questions to the IRS asking for direction in resolving a series of important questions regarding Madoff and Ponzis, such as whether there will be special extensions for victims. The letter also suggested setting up a special "Madoff unit" to process claims. (Read more about Ponzi schemes...