Ponzi loss amendments

[manceandpeters]

Help all,
I have a client who I have discovered was involved in 2 different ponzi schemes. One was clearly 2007, so I realize safe harbor isn't an option, & I will just go with the theft loss. My question is whether safe harbor options are available for amendments. Her other loss is either 2008 or 2009. Indictments both years temp receivership 2008 , final receivership 2009. I can't seem to find anything on this, & remember seeing something of a May date as final date for safe harbor. Does anyone have any advice on this?
Thanks

[BOB W]

Welcome....... sorry no one is responding, not even me. Google "Ponzi" and see what you can find. Many of us have been through this question on this board, so search for Ponzi here also. At that time there was also confusion.

Again, Welcome to the board. Sometimes lack of clear understanding of a question will leave a question unanswered. Nothing personal when it happends.

Maybe this will help...???

http://www.journalofaccountancy.com/Web/20091552.htm

[manceandpeters]

Thanks Bob,
I have that article & have googled everything, this was my last shot before calling IRS! Ha good luck with that huh. My confusion on amendments was a section in the rev proc 2009-20 that states to use safe harbor for a loss in 2008, an executed statment must be filed with amendment or return by 5/15/09. But no where else is amendments using safe harbor addressed. I am probably missing something obvious & was hoping someone else had this same issue occur.

[BOB W]

Thanks Bob,
I have that article & have googled everything, this was my last shot before calling IRS! Ha good luck with that huh. My confusion on amendments was a section in the rev proc 2009-20 that states to use safe harbor for a loss in 2008, an executed statment must be filed with amendment or return by 5/15/09. But no where else is amendments using safe harbor addressed. I am probably missing something obvious & was hoping someone else had this same issue occur.

There are some pretty sharp guys/gals on this board, I'm not one. Maybe they will chime in at some point if the post is kept alive and up front.

[Bees Knees]

TTB, page 1-22 also has good information on ponzi scheme losses. It says the following:

Taxpayers who use this safe harbor treatment,
and who follow the procedures outlined in Revenue Procedure
2009-20, will not have the treatment of their loss challenged by
the IRS.

In other words, the purpose of the safe harbor is to keep IRS from challenging your loss deduction. It is not a requirement to claim the loss.

Thus, you can go ahead and claim the loss on an amended return, even though the safe harbor provision is not met. All it means is IRS can decide to challenge the loss deduction, if they choose. As long as the loss is a legitimate ponzi scheme loss, I would not be afraid to defend the claim if the IRS decided to challenge the amended return.