Today Bernie Madoff’s client list was made public revealing even more high-profile individuals defrauded by the $50 billion Ponzi scheme. Among the names disclosed today are John Malkovich, Barbara Bach (Ringo Starr’s wife), Kevin Bacon and Dodgers great Sandy Koufax.

What these fraud victims need to know is that they can recoup 30-40% of their losses if they take advantage of Internal Revenue Code Section 165. So if you’ve paid taxes on investment gains that turned out to be false, you can recover some of their money back in the form of tax deductions or possibly even refunds.

This can be accomplished by converting capital stock losses into “ordinary” losses and offseting them against prior, current and future ordinary taxable income, thereby reducing the taxes paid in those years, and receiving a refund with interest.

But anyone attempting this should know that they will need specialized tax help because this is an incredibly technical, time consuming and complex process. Additionally, to recuperate any previously paid taxes, you will need to go back and amend your tax returns, which means you will inevitably be audited.

And in our current economic recession, the IRS is even more reluctant to bail out Madoff victims.

Therefore, investors seeking relief from fraud should know that while there are clear tax benefits to deducting a fraud loss, but they should be prepared to come under IRS scrutiny and have expert tax representation in place to help them successfully defend their claims.

For more advice and information on investment fraud representation, visit the Tax Resolution Services web site for a free tax relief consultation or call 866-477-7762.

More Tax Help, IRS News and Tax Relief Tips:

1. What Safe Harbor Really Means for Ponzi Victims - IRS Estimates it will Refund Fraud Victims $17 Billion, But Not Without a Fight
2. Relief for Victims of Investment Scheme - Deducting Investment Tax Losses Can Help Madoff Fraud Victims Recover Their Financial Losses
3. New IRS “Safe Harbor” Guidelines for Ponzi Victims Filing Tax Theft Loss Deductions
4. Tax and Planning Implications for Madoff Ponzi Scheme Victims
5. Falling Tax Revenues May Make It Difficult for Madoff Victims to Recover Their Losses

Tags: amending tax returns, Barbara Bach, Bernard Madoff, Bernie Madoff, fraud loss, fraud loss deduction, fraud relief, investment fraud, investment fraud recovery, investment fraud representation, IRC 165, IRS 165, John Malkovish, Kevin Bacon, Madoff Victims, Michael Rozbruch, sandy Koufax, tax audit, tax relief, tax resolution, tax resolution expert, tax resolution services

This entry was posted on Thursday, February 5th, 2009 at 3:25 pm and is filed under Tax news and tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.