I've never been so happy to learn one of my investments was fraudulent

Miscellaneous and Personal Stuff I Must Share
1

I know this sounds odd. I recently discovered that one of my investments was with a fraudulent company – and I’ve never been so happy. :smiley: No, I’m not being sarcastic, although there is a dark streak to my happiness. Here’s the abbreviated story.

Last year I had a pretty large gain (the company I work for was bought out). I put a bunch of the money in an investment that seemed legitimate at the time. Within a few months, the main guy at the investment compary had committed suicide for allegedly personal relationship issues. Rumors of impropriety started arising fairly soon, but I heard nothing convincing on the business side. Nonetheless, in fairly quick order, the company was in bankruptcy and of course all of my money was inaccessible, and whether I will be able to recover ANY of it is very unclear.

So tax time comes around. Not only do I have a large gain on which I must pay taxes, but much of the gain is also gone (though I had put aside enough to pay the taxes).

So I go to a CPA. She says if I can find evidence of theft or a Ponzi scheme, I can deduct the loss in 2008, which would offset a lot of the large gain I had, saving me a bunch of money in taxes. So after a bunch of Google-fu, I managed to find enough evidence in 2008 that a theft had occurred. Yay!!!, er, I mean goodie for me… :confused:

So I GUESS, this is good news. I will be able to recoup some of my losses by saving some money on taxes. Or at the very least, not have to pay taxes on my losses (insult to injury, etc.).

Just something I had to share. :slight_smile:

J.

2

Whoops! Talk about mixed feelings!!!

Though, haven’t you already paid the taxes? and now are faced with the fun task of having to amend your return? Be prepared with loads of documentation as I suspect this sort of thing is what makes the auditing software take notice.

Now I’m being nosy, but would this scheme be anything we could read about on the internet somewhere?

3

I filed for a tax extension, so I didn’t file my taxes yet. I did send in a Butt Load ™ of money with the extensions, and I assume I’ll be getting most of it back.

If you REALLY want to read about it, google “Radical Bunny”.

J.

4

Make sure that your tax professional is aware of the new IRS Revenue Ruling and Procedure for Ponzi schemes. I have read that it is fairly (but not entirely) beneficial for the victim.

5

Yes, she is very familiar with it.

J.

6

Wow. One of the articles said that most of the investment money came from friends and family of the principals. That must have made things sticky. I’ve never been hit up for anthing more than car repair cash.