Loss Deduction ON YOUR OWN Taxes IN THE EVENT THAT YOU Were The Victim Of Fraud

We’re not taxes attorneys and consequently we never give taxes advice. But as the federal government tax deadline looms, we can tell you that victims of investment fraud might be able to deduct their deficits from their yearly federal tax bills. Overall the procedure for taking this type of deduction is both complex and time-consuming, but if you have been the sufferer of investment fraud or a ponzi structure, be sure to talk about the problem with your taxes preparer.

The IRS allows taxes deductions for casualty or robbery loss related to your home and items within the home. When an investment adviser or stockbroker intentionally misrepresents investment information, steals funds, or causes his / her clients to be defrauded normally, the sufferer might be entitled to the deduction. In order to have a theft loss deduction, victims must follow the correct procedure.

A theft reduction may only be deducted in the year it was found out. The investment will need to have been designed for revenue with already taxed money in order to be eligible for the deduction. Further, very small losses might not be deducted. As always with the IRS, documentation is important. Victims who have kept good records and can document their investment losses are more likely to get the deduction.

Given the prevalence of Ponzi techniques perpetrated during the last decade, the Internal Revenue Service has tried to make it easier for victims to recover their losses. Thus, as an alternative to the theft loss deduction method discussed above, the IRS also offers established a “safe harbor rule” under which financial victims may have an easier time documenting their losses.

Please remember that there are extensive complicated issues involved with taking a deduction for investment-related robbery. This post hardly scrapes the top. Our sole purpose in mentioning the theft deduction is to ensure that victims of fraud will at least know to improve the issue with their tax preparers.

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