Tax Relief for Ponzi Investment Victims

Jan. 27, 2011 - PRLog -- For victims of Ponzi investment schemes, there may be a small bright spot when it comes to your 2010 federal income tax returns, according to NJ CPA Nick Magone, managing partner of NJ CPA firm Magone & Company.

Says Magone, “The IRS generally treats investment losses as capital losses, which means they can take years to fully deduct — including losses suffered by victims of fraudulent Ponzi schemes.”

However, the IRS announced it will allow victims of investment fraud to treat their losses as what’s known as an ordinary loss and gain more favorable tax benefits.

According to Magone, the losses are more widespread than the average investor might think. “Though the Bernie Madoff case made the biggest headlines, more instances of fraud are being uncovered due to tighter regulatory scrutiny and a crackdown in the wake of all the publicity.”

Though fraud victims are often embarrassed to come forward, Magone recommends that they be upfront with their financial advisor. “Working closely with a tax professional, victims can gain at least a small amount of relief with a mitigated tax burden on the funds that were lost.”

For  more information on the latest tax provisions and their implications for Ponzi scheme victims, consult your tax professional or contact Magone & Company at (973) 301-2300.

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About Magone & Company
Headquartered in Florham Park, the NJ CPAs at Magone & Company, P.C. bring a unique 360° perspective to the practice of accounting and business consulting. The firm supports leading entrepreneurial companies, non-profit organizations, professional services firms, hedge funds, and the real estate industry with a complete range of accounting, audit & attestation, tax, wealth management, and business consulting services. For more information, visit http://magonecpas.com/.