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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4015
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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need a tax expert for this what about zeek rewards. is it

Resolved Question:

need a tax expert for this
what about zeek rewards. is it posible the bids they claim can be writtenoff and how isthat you get 1099 on income they didnot physically send to you and also then they have the money. also they do never answer their phones and when you google map the address it comes up as empty farm field? what do you know about this i ahve invested and am very concerned



in case you do not know zeek rewards is a mlm penny auction company



i have invested 2000 with them and have some serious reservations about what i did.


1. the $2000.00 i invested is for 2000 bids =$1.00 each that i am giving away to people so they can go to zeekrewards penny auction site to bid on items. so far so good there is no question in this case that my 2000.00 investment although they carefully do not call it that is a cost of doing business.






2, here is where it gets mirky. at the current time they are returning on average close to 2% per day. so to keep in simple i make about $40.00 a day which i have two options. first i can say i want to reinvest this $40.00 back into buying more bids that the company can then give away. at that point my account lets say i start with 2000.00 is credited for $40.00 in cash which means i started based on the 2% return at $2040.00 so in my mind my account should go back down to @2000.00 but no what they do is they give me vip points for 40 on which the daily return is calculated so i have supposedly bought 40.00 worth of bids and at the same time i am credited the 40 points



i have been told by distributors that i am able to write off the $40.00 that supposedly got in cash to buy bids and i have said it can not work that way cause i got 40 points so my point total is 2040 on whihc tomorrow my return compounded is 2% on 2040 so now i have 40.80 to buy more bids and then they also give me 40.80 points so my new balance for the next day is 2040+ 40.80= 2080.80 on which the next day i will have 2% compouded so forth and so on. and this is how people who invested say 4000 in oct of 2011 have 50000 in points on whihc they are supposedly making 2% compounded or it that example about 200 a day that goes into bids and then they get 200 more points.



it seems to me from an irs stand point of view that this would be looked at as the bids have 0 value since on the one hand they show cash you do not get and then give you the points.



i am so skeptical. and when you call customer service after waiting for 2 houurs they are a third party custoemr service provider and then when you try the home office then never answer the phones.







then here is the real sketch part. on the increase in the value in your points even though you do not get a check each day you are sent a 1099 and of course conveniently the company has the cash.



now it is true that people are getting money out each day.







i just really wonder if this has ponzi scheme all over it.



how can you write off the bids when you get points back







and these other questions i need your advice





Already Tried:
i have googel mapped them no such building shows up have called their customer service it is a third part waited 2 hours and they can not explain how you get a 1099 on the increase in points and do not get any cash
Submitted: 2 years ago.
Category: Tax
Expert:  Stephen G. replied 2 years ago.

Stephen E. Grizey :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

 

This is a well know Scam. That's the botXXXXX XXXXXne;

 

The money that you invested, less whatever you received back, may be claimed as a Theft loss on Schedule A.

 

If you can substantiate the fact that you made this as an investment, then claim the loss as a short or long-term capital loss. Consider yourself lucky that you only invested $2,000.

 

As far as any 1099 you may have received on "phantom" income, the number should be included in the appropriate place on your income tax returns and then subtracted on the next line & described as a "Fraudulent 1099 in connection with Scam".

 

That's how I would advise anyone with this set of facts and advise them that any further investigation by them is just a waste of time & money.

 

Please remember to click on the green "ACCEPT", or the "smiley face" as appropriate; that is the only way we get credit for our work, even if you are on a subscription plan. Feedback, if you have time and bonuses, where you think they are warranted, are always most appreciated. Before or after you ACCEPT, I will be happy to answer any additional follow-up questions you may have. Thanks again for using our service.

If you'd like to contact me again, in the future, just ask for "Steve G" at the beginning of your question.

 

 

Stephen E. Grizey41021.9710640046
Customer:

ok i will await your answer. the biggest thing you can see is this question as to the bids being use as a 100% tax write off.

Customer:

great have you read my post about the whole controversy on zeek rewards

Customer:

are you there?

Customer:

im here

Stephen E. Grizey :

Did you receive my previous answer to this question, posted last night?

Customer:

no

Stephen E. Grizey :

I'll repeat it then. There are so many versions of this question posted, that I'm not sure what you are looking for at this point. I believe that this is a well know Ponzi-type scam, designed to draw in additional "victims"; As far as what you can do tax wise, whatever cash you have "invested" in zeek, less whatever you have received back, if anything, can be claimed as a theft loss as an itemized deduction.

Stephen E. Grizey :

If you can substantiate the fact that you have made this payment as an "investment", then you should claim it as a short term or long term capital loss.

Customer:

here is my simple version each day i earn cash that they have me reinvest in 100% more bids that go out to people on the internet to use and to bid on items in their penny acutions whihc are go on around the clock.

Stephen E. Grizey :

In any event, given the amount of money involved, I'm not sure that it matters what you do with it; there's not enough money involved to cause much of an issue either way.

Customer:

then what they do is in addition they add vip points to my account on which they compound the interest every day my quesiton is if they were just dedcting cash it wuold be a cost of doing business however since they recredit my account each day with the same amount in points my balance keeps going up so i make more and more cash each day to buy more and more bids. it is possible to get cash out and many have. i just do not see how it is from a tax point of view possible to write it off and then get points back it seems the value of the bids for irs is 0 as it is a wash

Stephen E. Grizey :

I understand what's involved. It seems like it will turn into a giant waste of time & effort.

Customer:

my brother in law invested 4000 in oct. and now has 50000 points a bigger sum it is adding up so fast also he got a 1099 last year for the addition in points even though he did not get any money out.

Stephen E. Grizey :

You have no tax basis in these additional bids or points, so there's nothing to "write off".

Customer:

for the past several weeks he has been getting weekly checks of 2000 + a week and i am thinking if there is any chance this is real i was going to put another 10000 in or so but the bids thing threw me as to how they could be written off and if they couldnt then you are in a position where you are getting a 1099 on the accumulation of the points if you take no money out.

Customer:

they require us to give the bids away. so if i have 2000 invested which i do at 2% a day that is 40.00 that goes into a cash account which i do have the option of taking the cash out in cash or reinvesting in new bids so that part makes sense however they add points of 40 a day and then keep compounding and each day i can reinvest or i can take the cash

Stephen E. Grizey :

I also commented on the 1099 issue last evening; If you receive a 1099 without any "real" payment, I would include it in income and then back it out (subtract it) on the next line indicating that it was issued in connection with the "Zeek Rewards Scam".

Customer:

as the points accumulate zeek is sending a 1099 on teh accumulation of the points even if you take no money out

Customer:

do you think the irs would actually allow that knowing how they operate. the company says you can deduct the cost of the cash you used to buy bids against your income and you are saying that you can not

Customer:

i know there is no way anything can compound at 2% a day however it seems very tempting as peopel like my brother in law are getting real money. he invested 4000 and has gotten back over 24000 already and his acount keeps getting larger and larger as the daily compounding continues

Stephen E. Grizey :

I would like to see the checks that exceed what he put into this "deal". I'm sure the 1099 is a 1099-NEC classification so all this would also be subject to self-employment tax.

Customer:

in 2011 his 1099 was based on his accumulation of points and not on actual checks paid to him. he has only started to take real cash out in the last 2 months and has been doing it. several otehrs got 1099's also with no checks for 2011

Stephen E. Grizey :

You use the case if you either invested it yourself or paid taxes on it. That would establish a tax basis it the income.

Stephen E. Grizey :

cash

Customer:

there is no issue with the checks that he is recieving as to be taxable however in addition to the cash he is phusically getting he will as far as i can see also get a 1099 on these points that keep going up on which his dailly cash is going up as the 2% compounding is now being calculated on more that 50,000 so that is 2% a day and then the incrtease in points is calculated tomorrow on the increase in points in his account so fort and so on

Customer:

so is the accumulation of these points a taxable event as they are saying as the points somehow turn into cash and the bids which are purchased have no value to write off since the points are also added?

Stephen E. Grizey :

I don't know what else to tell you except the way it is going your brother-in-law should be a billionaire before he knows it.

Customer:

i know so you say my real point is that you think it is a ponzi scheme and there is no way i can dedcut the cost of the bids that i buy

Customer:

that is the most important point

Customer:

if the bids can not be written off it is really a scam as the company has the cash and is not paying it unless you request it

Stephen E. Grizey :

Here's the way I see it:

Stephen E. Grizey :

If this is a "business activity", then

Stephen E. Grizey :

Whatever cash you "invest", plus whatever income you pay tax on via a 1099 & leave on deposit would be your expense and whatever actual cash you receive would be your revenue.

Customer:

so the bids can be writeen off is that what you are saying since it is what they say the job is. if you can do that it means that the 1099 you get is offset other than real cash you get by teh cost of the bids you are buying each day thi sis why this is so confusin

Customer:

that is the main question i am concerned taht the bids can not be written off as you get the points back

Customer:

in your opinion can the bids be written off or not that is the essence of what i need to know

Stephen E. Grizey :

Honestly, I can't express it any better than I have; I am not going to comment on your interpretation of how I expressed that you could account for this tax wise.

Customer:

i am sorry to be so lame just this then do you think i can write off the bids or not

Stephen E. Grizey :

Whatever cash you "invest", plus whatever income you pay tax on via a 1099 & leave on deposit would be your expense and whatever actual cash you receive would be your revenue.

Customer:

that is really at the end of the day all i am trying to find out u have been extremly thoruough and helpful

Stephen E. Grizey :

Thanks.

Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4015
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and 9 other Tax Specialists are ready to help you

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