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400,000 ponzi loss-what can i write off in 2009

Customer Question
400,000 ponzi loss-what can i write off in 2009
Submitted: 7 years ago.Category: Tax
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Answered in 15 minutes by:
1/1/2010
Tax Professional: Merlo, Accountant replied 7 years ago
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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Hello south,

 

The IRS treats losses from a ponzi scheme as theft losses.

 

To deduct theft losses, there is first a $500 deductible which applies. After deducting the first disallowed $500, you must further reduce your loss claim by 10% of your adjusted gross income. The balance of the losses may then be claimed as an itemized deduction on Schedule A of your tax return.

 

If your casualty or theft loss deduction causes your deductions for the year to be more than your income for the year, you may have a net operating loss (NOL). You can use an NOL to lower your tax in an earlier year, allowing you to get a refund for tax you already paid. Or, you can use it to lower your tax in a later year. You do not have to be in business to have an NOL from a casualty or theft loss.

 

Here is a link to the IRS publication 547 which discusses in more detail how to deduct a theft loss.

 

http://www.irs.gov/publications/p547/ar02.html#en_US_publink1000225449

 

If this was helpful please press the Accept button. Positive feedback is also appreciated.

 

Thank you south

 

 

Merlo
Merlo, Accountant
Category: Tax
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Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
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