"Practical Tax Issues Related to Theft Losses from Ponzi Schemes"

Many people will remember 2008 as the year Americans had one of the most exciting election campaigns in our nation’s history. Others will remember 2008 as the year the real estate bubble burst and the market collapsed, wreaking havoc on Wall Street and Main Street alike. Many clients of investment companies and investment advisers, especially clients of Bernard L. Madoff Investment Securities LLC., will remember 2008 as the year the greatest global Ponzi scheme in recent history imploded. This article is directed to this third group: taxpayers who lost their investments in Ponzi schemes. It examines some of the practical issues that taxpayers may encounter as they seek the best tax strategy to maximize the value of their losses generated by such a Ponzi scheme.

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