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I was defrauded out of over $500.000 in the Middle East. A…

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I was defrauded out...

I was defrauded out of over $500.000 in the Middle East. A law firm is recovering my money but they don't have a place to perform a cash back or wire transfer because of entanglement by the IRS. There is much more to the story.

Accountant's Assistant: In what state did this occur?

In Virginia. The money was "invested in what I would learn was fraudulent firms. Israel and the FBI have just shut them down, but this is a multi-billion $$$ Ponzi Scheme that operates world wide.

Accountant's Assistant: Have you talked to a lawyer yet?

Several. Most of them are scam operation.

Accountant's Assistant: Anything else you want the lawyer to know before I connect you?

Yes. I am broke. I just had two major operations this year. The hospital took away my anti-depressive and stress and pain meds because they thought I was taking too many pills prescribed by a doctor. I have not walked in 2 years. The VA DMV took away my right to drive a car because they found an aneurysm on my brain. The IRS seized my bank account based on money I do not owe them. This story has no end.

Submitted: 5 months ago.Category: Tax
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Answered in 8 minutes by:
11/22/2017
Tax Professional: Zoey_JD,
 replied 5 months ago
Zoey_JD
Category: Tax
Satisfied Customers: 30,036
Verified

Hi,

I'm Zoey.

I've reviewed your post. Are you saying that a so-called foreign law firm has recovered your money but isn't able to send the money to you? How do you know that the law firm who has told you this is legitimate, and what are they asking you to do so that they can give you your money? Are they telling you to open up an account in a foreign country and put money in it and then they will transfer it? What is your question with regard to this situation?

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Customer reply replied 5 months ago
No. Since the FBI and Shin Bet are finally shutting down these fraudulent binary options schemes, the frauds are running scared (they face 20 years in a US prison for illegally scamming Americans). Birman Global Law in conjunction with Wealth Recovery in NY - they want me to ask my banks to accept wires and change backs, which the banks said yes, but then the IRS closed in before that could happen. The IRS saw the fraud money in my account and considered it disbursable income and want to tax me so I cannot move money in or out of my bank. This is a complicated situation. I just want my stolen money back.
Tax Professional: Zoey_JD,
 replied 5 months ago

I'm aware of binary option frauds, most of which are run from out of Israel and Cyprus. I'm also aware of both Birman and Wealth Recovery.

However, this would appear to be more of a tax question than anything else and would be out of my ballpark. I'm going to opt out and leave it for a tax lawyer..

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Tax Professional: ,  replied 5 months ago
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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 5 months ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,001
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi My name's Lane

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice 1986.

...

What you'll need to do is take a theft loss. This will accomplish two things; Reduce what IRS says you owe AND provide documentation of the ponzi scheme itself (helping them to connect the dots between what's going on and your tax situation)

...

These schemes have become so prevalent hat IRS has added an entire section (section C) to the form Form 4684 – Theft and Casualty Losses.

...

See "SECTION C—Theft Loss Deduction for Ponzi-Type Investment Scheme Using the Procedures in Revenue Procedure 2009-20" of the form.

...

If you receive a reimbursement in a future year, you do not need to amend the tax return on which you take the loss and recompute taxable income. Rather, the taxpayer includes the reimbursed amount in ordinary income for the year received to the extent that the theft loss deduction produced a tax benefit.

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In filing the 4684 you should write a cover letter connecting the hold on your accounts with this loss and ask for an immediate reversal.

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Make the point that if you DO receive recovery, you will report that income in the year received IF ever received.

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There are two types of theft losses available to taxpayers that suffer losses not in connection with a trade or business – personal losses and losses in connection with income-producing property. Ponzi scheme losses are theft losses from income producing property, and the taxpayer should make this clear on a tax return. Theft losses are not subject to the 2% limitation on miscellaneous itemized deductions and provided they are from income producing property, while not an “above the line” deduction, are not subject to the 10% and $100 dollar limitations.

...

You should file this return using private delivery service, rather than US mail or certified mail. This will give you the opportunity to retain proof of delivery. The other option is to call your closest local IRS service center and set an appointment to go into the field office to file the paperwork.

...

IRS field office locator

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