I think we can get the answers (and we need to get this done!) about how to handle your investment losses from a Tax Attorney for the whole group, so each of you does not have to pay for this. We need advice on the Esmeralda investment and the IPX 1-2-3 PPM's and how to do this for personal taxes, SD IRAs, and trusts. So we need someone with investments in each of these scenarios to participate, or provide documents at least.
It will cost around $400 to do this, so I can set up a "Go Fund Me" type page and everyone who is willing can contribute. The only problem is making a donation does have fees (from PayPal or credit card companies) even though Go Fund Me charges nothing.
Would you prefer to just mail me a check? Let me know in the comments.... I will provide an accounting of the money and if we have any left over, we can donate it to one of the food banks or one of the Thanksgiving dinners for the needy projects. Thoughts?
Just sent my CPA another email, with a copy of the press release from the AZCC, and asked if there was any way to start declaring the losses even though this hasn't been identified as a Ponzi scheme by them, unfortunately. Haven't heard back yet, but I fear unless there is a bankruptcy or it's declared a ponzi, we cannot start writing off the losses. I am very curious about this Tax Attorney, since all the information I have gotten on this (as well as prior communication from my CPA), says that I cannot write if off. Perhaps it is different if I self-directed my IRA vs. used personal cash, but I think not.
I think we should get a legal opinion..... These are, after all, securities. From the IRS -
" If you own securities, including stocks, and they become totally worthless, you have a capital loss but not a deduction for bad debt. Worthless securities also include securities that you abandon. To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it.
Treat worthless securities as though they were capital assets sold or exchanged on the last day of the tax year. You must determine the holding period to determine if the capital loss is short term (one year or less) or long term (more than one year). Report worthless securities on Form 8949, Part I or Part II, whichever applies. Indicate as a worthless security deduction by writing Worthless in the applicable column of Form 8949."
I have a hunch that "abandoning" the security does not preclude you from any money collected against the judgment. This is a big question that a CPA can't answer.
However, for your IPX PPM, it sounds pretty straight forward, since it is a stock for most of you.
There is another question worth asking:
Can the interest paid on the Esmeralda note, in 2017 and the first 3 months of 2018, be deducted from the principal, reducing the 2017 and 2018 capital gains and reducing the loss amount to be written off ?
I had asked the question to my CPA awhile back and she thought it could be done. An amended return can always be done. It is by far preferable to have it go down as a Ponzi scheme vs. a capital loss that carries just a $3000 capital loss carryover will last all of us til we die.
Excellent point, Hellcat. I'll put that on the list of questions! I'm going to make a wager that this can actually be done! Wouldn't that be nice! You are of course referring to your reported income from the interest paid by IPX, just so everyone understands.
The problem with waiting until it is legally determined to have been a criminal illegal investment scheme is that might take years ..... it was 10 years before Madoff's verdict. I'm afraid many of our friends here won't be around to see that happen. And if it can be done NOW in just the same way, why wait?
How much do you want sent in a check to you, Ann, and need the address. Thx, Sue Hewitt
My CPA just replied to my email about the Tax Attorney situation:
" The IRS generally states that there must be a documented event that occurs to support the position that the investment is “worthless” before you are able to claim a deduction for writing off the basis of the investment. "
So perhaps the word "generally" leaves the door open a bit?? I guess it's worth a shot!
I think the documented event here is the entry of the judgment and his failure to comply. What more could they want?
@Ann Hyde Well, that's definitely how "we" might interpret it, but it's what the law says.