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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
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Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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How can I claim capital loss for a bankruptcy preference ...

Customer Question

How can I claim capital loss for a bankruptcy preference claim repayment settlement?
Submitted: 6 years ago.
Category: Tax
Expert:  Ed Johnson replied 6 years ago.

Dear landy,

Are you the creditor or the bankrupt person?

Customer: replied 6 years ago.
Reply to Ed Johnson's Post: I'm creditor and was asked to money back with certain amount by the bankruptcy creditor trust.
Expert:  Ed Johnson replied 6 years ago.

What was the credit for.

and when you say, you were asked to money back, and bakruptsyc creditro trust do you really mean that you were asked to give money back to the bankrupt person by the trustee of the bankrupsy estate?

Customer: replied 6 years ago.
Reply to Ed Johnson's Post: I invested an insolvent financial institute but got paid within 90 days after its bankruptcy. I was hit by the preference claim made by creditor trustee under the bankruptcy code 547. In the case, I was asked money back to the credit trustee
and t causes me an investment loss.
Expert:  Ed Johnson replied 6 years ago.

DearCustomer

In this case, you would claim this loss on form Schedule D.

this assumes that this is not a settlement due to a judgment for your non-performance.

If this was a settlement as part of the bankruptsy and you lost money on your investment to the fiancial institution, you woudl use schedule D.

http://www.irs.gov/pub/irs-pdf/f1040sd.pdf

 

Customer: replied 6 years ago.
I know I may use schedule D to claim a capital loss. I need to clerify that I can deduct for the total loss up to $20000 for one time or $3000 each year with carryover.

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Ed Johnson
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GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee