Ask the Tax Resolution Expert: Victim of Investment Fraud Needs Advice on Filing 2008 Taxes
In Dec. of 2007, I gave an independent broker some money to invest for me. About $30,000. Three weeks later (first part of Jan 2008 ) he sends me a check for the amount I gave him and in the letter told me this money was never invested.
UHHHMMMMM. Ponzi gone wild.
Several weeks later the Fed’s stepped in – he went to court—he is now in prison (long story short). Now the courts tell me if I give back 100% of the money they will divide it up and maybe send me a couple of dollars.
- If I give back 60% of the money they just tell me thank you and good by.
- If I give back 0% of the money they take my house.
I gave them 60% plus lawyers fees. What is the best way to handle this when I file taxes?????
Help –from a laid off worker that needs help…..
~Doug P
Hi Doug,
You can take a Section 165 deduction on the 60% (less what you get back) that you lost. This goes on your 2008 return as an “ordinary loss” (vs. a very limited capital loss). The ordinary loss reduces your taxable income in 2008, thereby allowing you, at least, to recoup the tax effect on the 60%. If the loss was greater than your income in 2008, you can elect to carry back the loss to the previous 3 years or elect to carry it forward for the next 20 years.
Make sure you have a competent CPA who knows what they are doing. This is a complicated process and your return may be audited so you need expert professional representation if you are going to undertake this process.
This is what I recommend to fraud loss victims, including former Bernie Madoff clients and other investors seeking relief from fraud.
Got questions about tax audits, wage garnishments, IRS bank levies, payroll tax problems, or tax relief in general? Visit the Tax Resolution Services web site for a free tax relief consultation or call 866-IRS-PROBLEMS.
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