Tag Archive for ponzi scheme tax loss

Ponzi Scheme Tax Recovery And The Importance Of “Timing” When Claiming Tax Losses

Empty Pockets

Since the timing of the theft loss deduction is critical to the real economics of the recovery, this phrase is all important. Therefore, before considering tax planning opportunities, on must study the phrase “a reasonable prospect of recovery” in more depth.

The phrase finds its origin in the early internal revenue codes that permitted a theft loss deduction for losses sustained in a taxable year but did not define the word sustained. Therefore, prior to 1954 the law was unsettled as to when a loss was sustained. This caused taxpayers to often lose their tax deduction for a theft loss when the statute of limitations had run on prior years; and it was later found that a loss had been sustained in one of those prior years that was no longer open for change. Read more

Ponzi Scheme Losses: Procedures for Recovery of Tax Benefits


In considering the various options of recovery available for tax losses some fundamental knowledge of the law is important. We are going to cover those fundamentals into the following order.

1. The Amount of the Theft Loss Deduction
2. The Timing of the Theft Loss Deduction
3. Tax Loss Carry Backs and Tax Loss Carry Forwards
4. Deduction in the Year of Loss
5. Deduction in Years Other Than the Year of Loss
6. Other Sources of Tax Recovery
7. Payments Received as a Return of Capital – Not Income Read more