Discussion:Capital Loss CF
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| 12 June 2007 | |
| Client has 83K capital loss CF from 1998; she had not filed a tax return since that time except for 2002 and in the year 2000 has received a nasty gram for that year due to a large amount of stock sales and sale of home.
I have no information to file 1999 and besides IRS is not requesting that year (yet), so I am beginning with the year 2000. Can I use the 83K CF in 2000 even though what may be missing for 1999 could have used up the CF if she had large stock sales in that year? As well she had an investment in a pay phone business; no K-1, but got 1099 rental income from the rental of the pay phones. The company filed bankruptcy in 2000 but then in 2002 they came out of bankruptcy and began paying her back from a Litigation Trust. I don't believe I can take the theft loss in 2000 even though they filed bankruptcy since in the next years through 2006 she is now receiving distributions from the litigation. Am I missing something here? | |
| 12 June 2007 | |
| You can't use the 1998 carryforward without knowing the intervening years. You must do the missing years first, or claim zero carryforward for 2000 and then amend later. You will only get a chance to amend later if she still owes and pays tax for 2000.
As far as the payphone business, if she got money from the litigation trust then it wasn't a total loss. can't deduct partial loss as a capital loss. As far as proving a theft loss, that is even harder. | |
| 12 June 2007 | |
| That is what I thought Kevin. Thank you!!
Well proof of the theft is easy as the company and the owner were indicted on money laundering, wire fraud, etc. But getting information from this woman is like pulling teeth out of a rhino!! She is very secretive and when I ask some questions, her answers are...I CAN'T REMEMBER. But she left me piles of paperwork and I see he was indicted and is in federal prison for the multi level marketing, etc. but I have no idea how much she eventually got paid. I am going to leave it off her return because I don't feel "good" about any of it. Thank you again my friend :) | |
| 12 June 2007 | |
| You're welcome. Hopefully she will remember to pay you for all your hard work. | |
Msmith7305 (talk|edits) said: | 12 June 2007 |
| Sandysea-
When you say the magical word "secretive", if it were me, I would fire the client. There is always a reason someone is secretive and if you can't be satisfied as to why that is, it's time to move on. In my opinion! | |
| 12 June 2007 | |
| Yeah Ms....I "promised" to handle the 2000 year but I am being very very conservative. For the other years, she needs to move on. My nerves can't take it!! hehe
I had a bad feeling, but I went with the 2000 year and I have documents for the sales of stock, the sale of her home and her other items. I did one year and now she can get her things. I can't think she will be tied to my hip for the remainder.... I have been honest with her; come audit, she will have to support the figures she gave me. I am picking up what she tells me, the rest is up to her....thank you again!! | |
Green hunter (talk|edits) said: | 12 June 2007 |
| SS - you stated that the person did not receive a K-1 but then you say the company filed for bankruptcy. Is the client a partner in a partnership or a shareholder in a corporation? | |
| 13 June 2007 | |
| Neither Green...it was a 1099 for rental she received. She had told me previously that she had a partnership interest, but according to IRS, she only got a 1099 for rental income from the pay phone company.
What it appears is that: She invested 52K to purchase pay telephones and then leased them back to the company to monitor, etc. They gave her rental income and then they sold to another outfit which filed bankruptcy. The company came out of bankruptcy in 2002 and has repaid funds to the investors. The owner of the company is in Federal prison for wire fraud and SEC violations.... | |
