10/25/2012 03:06:00 PM EST
New IRS Guidance for Ponzi Scheme Clawback Victims
For investors who need help from the IRS on how to treat
clawback payments made to trustees, the IRS has published a new webpage.
So far the IRS has posted answers to two questions:
1. How does a
taxpayer treat the repayment of a clawback?
2. What does the
taxpayer need to establish as to whether the repayment of a clawback is
allowable as a deduction (or a § 1341 credit)?
The IRS' efforts to assist Ponzi scheme victims is
commendable, and the information provided should prove to be helpful. Still,
any investor who has experienced the misfortune of having to write a check to
the trustee of a Ponzi scheme on a clawback claim is strongly advised to seek
professional assistance in properly determining the tax consequences. The last thing a Ponzi scheme victim needs is trouble from
Tax issues arising in Ponzi schemes are addressed in
Chapter 22 of The Ponzi Book: A Legal
Resource for Unraveling Ponzi Schemes (LexisNexis 2012).
Read additional articles at The Ponzi Scheme
Kathy Bazoian Phelps is the co-author of The Ponzi Book: A Legal
Resource for Unraveling Ponzi Schemes (LexisNexis 2012), along with
Hon. Steven Rhodes. The Ponzi Book is available for purchase at www.lexisnexis.com/ponzibook,
and more information about the book can be found at www.theponzibook.com.
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