Reporting Losses Resulting from Ponzi Schemes

We are a team of tax attorneys, certified public accountants, and former IRS agents that can help you file for and prepare your tax returns if you have been involved in any Ponzi scheme and need to take tax losses.

Revenue Procedure 2009-20 was posted on April 6, 2009.

This revenue procedure provides an optional safe harbor treatment for taxpayers that experienced losses in certain investment arrangements discovered to be criminally fraudulent.

It also describes how the Internal Revenue Service will treat a return that claims a deduction for such a loss and does not use the safe harbor treatment described in this revenue procedure.

Taxpayers claiming a loss are instructed to mark “Revenue Procedure 2009-20” at the top of the Form 4684.

The taxpayer must also sign and attach a statement as defined in Appendix A.

This requires signatures from the individual, corporation, or partnership.

A workaround for electronically filed TY2008 corporate or partnership returns has been posted.

The workaround provides guidance on how electronic filers may fulfill the requirements in Revenue Procedure 2009-20.

Taxpayers who electronically file Form 4684 with a TY2008 tax return claiming a loss as described in Rev Proc 2009-20 may fulfill the requirement to mark “Revenue Procedure 2009-20” at the top of the form 4684 by attaching a General Dependency and entering “Revenue Procedure 2009-20 on F4684” in the Description field.

Taxpayers may submit the required statement as defined in Appendix A of the Rev Proc, including the signature(s), as a PDF file. Name the PDF file “RevProc2009-20.pdf” and enter “Rev Proc 2009-20” in the Description field of the Binary Attachment.xsd file. Attach the PDF file to the electronic return.