How To Deduct Ponzi Scheme Losses On Your Taxes
Did you know that IRS revenue ruling 2009-20 can help you claim losses from Ponzi schemes? Here's what to do:
Step 1: Trust your life savings to a man who seemed nice at the Beth-El potluck supper.
Step 2: Find out that the nice man is in fact a demon who took all of your money and either used it to put gold accents on his boat or throw it in the toilet.
Step 3a: Prepare your taxes. No income this year? How about last year? 2007? 2006? Great! You get that back too!
Step 3b: No income in the past but, now that you're broke you need to get a job? Don't worry! If you lost enough money, you can carry the loss forward and live tax free for the next 20 years.
Step 3c: Read this article if any of this is unclear.
Step 4: Keep your eye out for a new financial guru at the next potluck.
Tax Breaks for Ponzi-Scheme Victims [SmartMoney]
(Photo: fimoculous)
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Comments:
"Step 1: Trust your life savings to a man who seemed nice at the Beth-El potluck supper."
Nice. Couldn't resist throwing that Jew thing in there, huh? I wonder if you'd be so quick to do that if the schemer was Pakistani? Gay? Black?
But, no, seriously, the fact that he's Jewish is TOTALLY relevant and material to the fact that he's a dirtbag and a thief. Also, we run the world. /sarcasm
No, it won't encourage more reckless investing. Being able to deduct the loss is a small consolation for losing the money in the first place.
@Cant_stop_the_rock:
To be clear - "reckless investments" are still capital losses, and there are no new tax "benefits" to losing money recklessly. This article is talking about investments lost through theft.
So I can deduct my Social Security contributions?
Ironically, taxes are their own ponzi scheme.
@Cant_stop_the_rock: I wouldn't put it past the scammers to use this as a recruitment tool. After all, Realtors use tax deductions as a benefit to spending more on a house with higher taxes and taking on more debt and people fell/fall for that.
Ok wth is with the whole "boxxy" thing? theres a idiot girl on youtube named boxxy, a TV app or something named boxxy, this guy has boxxy written under his picture, wth. is it some type of fnord?
@I Love New Jersey:
But where will the money for wars and defense contractors come from? Freedom Isn't Free (TM)!
"Trust your life savings to a man who seemed nice at the Beth-El potluck supper."
Haha. Anti-semitism funny.
@brettt: OK, how about a fish fry at St. Theresa?
Or an ice-cream social at Walnut Street Baptist?
Or beer-and-brats night at the VFW?
Anybody else I can offend, just for the hell of it?
@chris_d: The same place it comes from to pay for larger government, kickbacks, and other assorted bad policy.
@HurtsSoGood: @brettt has a point. All Jews are money grubbing shysters, ergo the if you meet a financial planner at a synagogue potluck, he's probably a scammer. I have a pretty good sense of humor for a Jew, and I'm not terribly offended, but that doesn't mean it's not antisemitic.
There should be an exemption for people who buy into Ponzi Schemes figuring they're on the inside of the scam, trying to profit over the "suckers" expecting normal (or at least sustainable) rates of return.
The vibe I get is most of the Madoff investors knew something was going on under the table, but figured so long as other people were getting played, they were fine with that.
@brettt: I'd bet he's specifically referencing Bernie Madoff, and didn't even think about anti-semitism.
@brettt: Maybe, just perhaps, Madoff makes it appropriate? Don't look for something that isn't there.
@Cant_stop_the_rock: Then explain why all of my retirement losses (in qualified mutual funds, with supposed low risk) are not deductible.
Because you you haven't paid taxes on them in the first place. Either it's in an Traditional IRA / 401K and it was tax deductible to begin with, or you haven't lost more than your initial investment yet (bought at $10, went to $50, is now now at $11 is a $1 gain, not a $39 loss).
@Trai_Dep: Yeah but if they reinvested their earnings with him, they lost it all like everyone else.
It's the people who put $500,000 in Madoff in 1970 and took their 12% as a dividend each year rather than reinvested it with him. They lost their $500,000 principal, but they took out over $2 million since then.
It's the feeder funds that knew or should have known there was a scam going on. Madoff was paying them 3-4X the normal amount to invest their clients money with him - that should have been a red flag right there. The feeder funds were paid NOT to investigate - it wasn't even their money if it was a scam.
While it is similarly funded NOW, SS isn't a Ponzi scheme as the government hasn't made any promises that it will always pay out the same, and that you will get any specific rate on your "investment". Politicians have said it, but officially, one could work all their life putting their 6.2% in and have the program end the day they turn 65.
@Cant_stop_the_rock: It really isn't. Paying any amount more in order to get a portion of it back is exactly what's being discussed.
Won't this just encourage more reckless investing? Can I deduct my Acai Berry business losses as well?