Discussion:Loss on Viaticals
From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
(Difference between revisions)
| Revision as of 17:36, 5 September 2007 Donnie C (Talk | contribs) (Taxref, I agree) ← Previous diff |
Revision as of 18:35, 5 September 2007 Mtmckeecpa (Talk | contribs) (BL, The Tampa C) Next diff → |
||
| Line 39: | Line 39: | ||
| }} | }} | ||
| + | |||
| + | {{ForumReplyPost|UserID=Mtmckeecpa|Date=5 September 2007|Text=BL, | ||
| + | |||
| + | The Tampa Company is, I believe, [http://www.165services.com/ JK Harris 165 Services]}} | ||
Revision as of 18:35, 5 September 2007
Discussion Forum Index --> Tax Questions --> Loss on Viaticals
Bottom Line (talk|edits) said: | 4 September 2007 |
| I've got a client that invested in viaticles about three years ago (no, she didn't talk to me before she did it). Now they're worth nothing. The company that sold them (Mutual Benefits) is out of business with one of the owners sentenced to 20 years with pending charges in many other states. Apparently the seller misrepresented the medical condition of the insureds including apparently falsified medical reports. The insureds that were supposed to die in 6-12 months are still alive and kicking. My client could continue the life insurance by paying the premiums on people that she has no idea of their true medical condition (or if they are even sick) but she doesn't want to throw good money after bad. Sounds to me like this is a capital loss limited to $3,000 per year. A company in Tampa is claiming that they have a way to write off the entire thing in one year. I asked if this was a Schedule A loss that would only help if the client itemized (she doesn't) and got the "trade secrets" line. They've been praised in the local papers but that carries no weight with me. Any ideas? | |
| 5 September 2007 | |
| Sounds to me that the Tampa company is trying to claim a "theft loss" under IRC 165(c)(3). This appears like a reasonable position assuming Mutual Benefits illegally misappropriated your client's money.
I don't know much about viatical settlement investments, but for this to be a capital loss, you'd need a "sale or exchange" of a capital asset. If the viatical was a "security" for tax purposes maybe you'd be able to claim a capital loss on the investment becoming worthless...but a "security" for this purpose is defined (in relevant part) as "a share of stock in a corporation..." Not sure that's what your taxpayer had. | |
| 5 September 2007 | |
| Viaticles...are they along the same line as wiggleable Ta Tas? | |
Donniecastleman (talk|edits) said: | 5 September 2007 |
| I thought it was the name of guitarist Steve Via's band, the Viaticles? | |
Donniecastleman (talk|edits) said: | 5 September 2007 |
| Oh, those things! In my opinion, trying to get rich off of the sick and the old should NOT be allowed to write it off as a bad debt or theft, your client is a scumbag and deserved to be screwed over, no offense to you of course! | |
| 5 September 2007 | |
| this very question was asked during tax season and a search under viatical would probably locate it.
Oh, I didn't realize it was you, BL, here is the search: | |
| 5 September 2007 | |
| Seems more like a theft than an investment. You buy the Brooklyn Bridge you can't really call it a capital asset. ♫ | |
| 5 September 2007 | |
| Would the Arlington Memorial Bridge be a capital asset? | |
| 5 September 2007 | |
| While not taking as extreme a view as Donniecastleman, I think this is a client you might want to use some caution with. First she invests heavily in viaticles, which have been rife with fraud for some time. Now it seems she is looking for a tax deduction through some outfit which claims to have secret information. | |
| 5 September 2007 | |
| Sounds to me like the Tampa company is trying to generate a new theft loss through the sale of information so-called secret information. The last time I looked, the Internal Revenue Code was in the public domain. I reluctantly have to take the side of a bad investment.
My peculiar point of view: Viaticles, while kind of ghoulish, seem reasonable as sort of the reverse of an annuity as long as the seller is not abused in the process. Just as though you were selling life insurance to healthy people, it would be highly speculative to buy one persons life insurance policy but actuarily sound for a pool of buyers to buy 1,000. | |
| September 5, 2007 | |
| Viaticles, as originally conceived, made a lot sense, and provided great help to those on the other end. Aids patients, those under on-going cancer treatment, and others who'd run out of cash to pay for their own treatments, much less living expenses, were the ones targeted. They had life insurance worth serious cash, but only on death. If an investor would come along...and provide some discounted amount of the cash, understanding that the person was under a death sentence, it was a win win. The patient could now live without money fears, and the investor was assured of a good return in a short time on the investment. Naturally, humans are involved, and the worst always comes soon after...so doctors were paid to declare a 'death sentence' where there was none...and the charlatans ran off with the money while the investor went, "Huh?" Is it Sch. D or Sch. A? Kind of the same argument as Enron in my opinion, and I think that stuck on D. | |
Donniecastleman (talk|edits) said: | 5 September 2007 |
| Taxref, I agree totally, while my post wasn't as elequant as yours, it was an honest post, sorry to be so damn brutally honest with what I'm thinking! :) It's the southern thing outweighing the politically correct thing, happens all the time! | |
Mtmckeecpa (talk|edits) said: | 5 September 2007 |
| BL,
The Tampa Company is, I believe, JK Harris 165 Services | |
