Word: taxed
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...last option is "mitigation," which requires the taxpayer to go back and reopen each year's tax filing, back to the year of the first investment. There are some technical requirements related to this option...
...think we're going to see the IRS come out with guidelines very shortly," said Neil Tipograph, tax partner at New York City-based Imowitz Koenig & Co. LLP, an accounting firm specializing in private-equity and feeder hedge funds. According to Tipograph and other tax experts, victims involved in Ponzis have four ways to reclaim taxes paid on fraudulent income, the first being a good old-fashioned "theft loss" deduction, which allows a person to go back three years and reclaim taxes paid. Currently, no deduction can be made on the original investment, especially if an SIPC claim has been...
...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...
...Paneth & Shron LLP in New York City, says he was assured by the IRS that "guidance would be forthcoming" - by April 15, one hopes. He suggests a simple approach for both the victims and the IRS. "If the [IRS] were to allow the victim to deduct his or her tax basis, less the SIPC recovery and less a small reserve for other recoveries, as a theft loss on the victim's 2008 tax return, the taxpayer could quantify the loss quickly and file for the appropriate refunds," Goldstein says. "The benefit for the IRS is the consistency of the claims...
...addition to demanding $2.3 billion in loans from Ottawa, Chrysler also wants the Canada Revenue Agency, that nation's tax collector, to stop hounding the automaker for more than $1 billion in taxes mistakenly paid to the U.S. years ago. The Canadian government only recently uncovered the error, and has since placed a lien against Chrysler's Brampton, Ont. plant and withheld $235.5 million in tax rebates...