Deduct your Ponzi scheme losses

Discuss

15 Responses to “Deduct your Ponzi scheme losses”

  1. Takuan says:

    could Americans deduct all their foreign policy losses from the Bush Tragedy as reflected by their personal share of the national debt?

  2. hooeezit says:

    Cool. A new can of worms just opened up and accountants all over are rejoicing.

    So, who qualifies a failed investment as Ponzi Scheme? SEC can’t even detect Ponzi Schemes when it hits them in the face 9 times! Do you have to have invested in it directly, or could you get the deductions if you lost money on an investment that in turn invested in the Ponzi Scheme? How long a chain can you draw on? How large must a Ponzi Scheme be before it qualifies for IRS deduction blessing?

    I could certainly round up some hobos around town to set up a fake company and run a fake Ponzi Scheme (haha!) where no money exchanges hands except for the hobos getting some food and shelter, but ultimately ending up in courts and possibly prison (more food and shelter). Some rich folks get to deduct a chunk of their income for tax purposes, and accountants all over rejoice again!

  3. jimbuck says:

    Can I deduct the value of stolen jokes? I ask because Doc (#4) stole mine.

  4. jjj says:

    government is a Ponzi scheme, the neat trick of this administration is fleecing the masses & leaving them with a smile on their faces

  5. Anonymous says:

    #5

    As a tax guy with clients who have been the victims on Ponzi Schemes (though not Madoff) the first qualifier is that there needs to be a crinimal investigation that denotes it AS a Ponzi scheme. You generally need to provide documentation of the FBI case # with your submission of claim.

  6. Chris S says:

    Ah….

    In this case, Canada is far more Libertarian than the U.S. In Canada, you get to live with your criminal losses, not get the government to let you deduct them.

    http://www.thestar.com/comment/columnists/article/626578

    Since Madoff never actually invested the money, in Canada you can’t deduct this as an investment loss. It’s treated like you gifted the money to Madoff to do with as he pleased.

    I expect that Canadians are free to sue him to get their money back, though.

  7. shadowfirebird says:

    The entire monetary system is a ponzi scheme, if you squint a bit and hold your head right. (Where does the money come from to pay the interest on your loan? In the end, someone has to take out a loan…)

    With luck your IRS haven’t defined “ponzi scheme” very well, and you can all pay the interest off with that for a while…

  8. BrotherPower says:

    Do we have a standard valuation scheme for magic beans? Anybody?

  9. Anonymous says:

    EXCELLENT!!! Now … where’d I put those Amway records?

  10. MrJM says:

    All of my Ponzi-related tax deductions are being handled by a friendly fellow in Nigeria.

  11. Anonymous says:

    If Mr Ponzi had a nickel for every time someone used his scam, how would that be taxed?

  12. Doc says:

    I’m going to go ahead and ask whether that includes FICA taxes. At least investment in Madoff’s schemes was voluntary.

  13. Ian70 says:

    @2: Dude!! We totally have the same accountant! Man, what a small world.. The Internet is so cool.

  14. PeterNBiddle says:

    If this is like the way other losses are managed, you will only be able to write off around $3K per year.

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