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Follow Please login to follow content. Register now for your free, tailored, daily legal newsfeed service. CRA: tax treatment of Ponzi scheme investments Dentons.
Canada July 10 The fact that the funds were not invested on behalf of the taxpayer does not change the nature of the transaction for the taxpayer. The amount of the bad debt claim will be subject to certain adjustments. This related article includes information on how to avoid a Ponzi scheme.
IRS gives investors in Ponzi schemes a tax break
Tax Relief Available to Ponzi Victims. The calculation of the loss therefore includes: The original amount invested Any subsequent investments Any amount reported as gross income in prior years and reinvested not withdrawn Less any amounts actually withdrawn Less any reasonably certain prospects of recovery The above amount is deductible in the taxable year the theft was discovered.
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IRS gives investors in Ponzi schemes a tax break - ABC News
The IRS may come back and restate the original loss deduction and charge penalties for understatement of taxes. The tax year when the investor believes that there is no opportunity for any additional recovery would be the appropriate time to claim the additional deduction. For more information on how an investor can claim the loss under the safe harbor treatment outlined in Rev. Proc , contact the Howard team today. Menu Search Search.
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Open Search Box Search Search. Is a loss from a criminal fraud a theft loss or a capital loss?
Is such loss subject to personal loss limits or limits on itemized deductions?