Discussion:Ponzi Schemes
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Discussion Forum Index --> Advanced Tax Questions --> Ponzi Schemes
Discussion Forum Index --> Tax Questions --> Ponzi Schemes
| 4 October 2009 | |
| I have a client who lost $$$$ courtesy of Madoff, et. al. I understand the Rev Procs for direct investors and for partnership investors, etc. However, my client had an annuity with the investment firm who invested his money in one of the Madoff funds. I'm stumbling around some at this point, but I think he can deduct his loss (basis vs. return of zero) as a miscellaneous itemized deduction subject to... I'd love to have some input from anyone out there dealing with this problem. Also, the annuity's value didn't go to zero until 2009, so do I wait for the 2009 return to claim the loss? I would appreciate any discussion on this topic. | |
| 5 October 2009 | |
| "but I think he can deduct his loss (basis vs. return of zero) as a miscellaneous itemized deduction subject to..."
It is not subject to 2% limitation. | |
| 5 October 2009 | |
| What I'm reading says that's his only option, because it's a tax-deferred annuity. The IRA's and annuities seem to be treated differently. They don't get the theft loss benefit because they're not "direct investors." Nor will my client receive a K-1 from a partnership passing along theft losses. He's in an annuity. But did lose everything he invested in that annuity. I appreciate this discussion. | |
| 5 October 2009 | |
| You are correct. Your client would not be subject to Ponzi and thus not be a qualified investor per RP 2009-20. However, the investment firm may be a qualified investor which is neither here nor there regarding your client. | |
| 5 October 2009 | |
| I'm looking for a discussion on when the investment in the Ponzi scheme is in an annuity. | |
| 5 October 2009 | |
| Was the investment firm that sold the annuity a qualified insurer under the state law? Have you looked at state guaranty association? See this http://www.nolhga.com/home.cfm
You never know, your client might be lucky!! | |
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