When it comes to financial investments, we’ve all heard “if it sounds too good to be true, it usually is.” Yet in spite of that warning, every year thousands of Americans lose their entire life savings to Ponzi schemes. The most infamous is Bernie Madoff who is serving a 150 year prison term for running one of the biggest Ponzi schemes in history. His financial scam devastated thousands, many being sophisticated investors to a total of more than $18 billion.
Fortunately there may be some good news for investors who have lost money through fraudulent investments such as Madoff’s. They could be eligible to recoup up to 40% of their losses under IRS Code Section 165.
The IRS Section 165 provides tax relief by allowing taxpayers to take a deduction of losses in that tax year. Taxpayers are able to:
- Convert their capital stock losses into what are called “ordinary” losses.
- Offset them against prior, current and future ordinary taxable income.
These actions reduce the taxes paid in those years yielding the taxpayer a refund with interest. Sounds easy to do, right? Well, not exactly because attempting to recover these losses on your own is tricky due to how technical and complicated the process is. Taxpayers will need to go back and amend their tax returns that will trigger an IRS audit due to careful IRS scrutiny. Having an experienced tax expert on your side with success in handling investment fraud cases will better help your chances for IRS tax relief.
If you were an unfortunate victim of investment fraud, it’s in your best interest to hire a certified tax resolution specialist who provides Section 165 Representation services. This tax professional will ensure all required tax loss deduction paperwork, amended tax returns and subsequent contact with the IRS are handled accurately.
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