Investment Fraud Loss - Section 165 (b)

[Maria]

Hello,

We have a few clients loss big $ in a fraud investment scheme. One loss $250,000. I have read some material that it is an ordinary loss that you can deduct all in one year, not subject to AGI limit. It is not a capital loss either. Can anybody advise what form to use? Or what line on 1040 it goes to?

Thanks in advance.

[S T]

Investment Fraud Loss

In So Calif there are a couple of these type of cases, so I have followed some of it, but have not been involved in actually having to file a tax return including a such a loss.

Here is a link that gives some information http://www.vcresearch.info/open/foru...09&ForumId=127.

Within that information it refers to form 4684, part II.

It appears to file for this type of loss you need a lot of documentation that is required to be submitted to the IRS, does not seem to be automatic and will be scrutinized.

I also found this link http://www.experts.com/showArticle.asp?id=106. I didn't read all of it, but appears to have some good information on trying to apply Section 165 losses.

There is also a lot more information if you "google" Section 165 Investment Fraud Loss

Keep us posted.

Sandy

[kpangelinan]

IRC Sec 165(a)?

Hope this helps.

http://www.nysscpa.org/cpajournal/old/15328443.htm

[Zee]

In So Calif there are a couple of these type of cases, so I have followed some of it, but have not been involved in actually having to file a tax return including a such a loss.

Here is a link that gives some information http://www.vcresearch.info/open/foru...09&ForumId=127.

Within that information it refers to form 4684, part II.

It appears to file for this type of loss you need a lot of documentation that is required to be submitted to the IRS, does not seem to be automatic and will be scrutinized.

I also found this link http://www.experts.com/showArticle.asp?id=106. I didn't read all of it, but appears to have some good information on trying to apply Section 165 losses.

There is also a lot more information if you "google" Section 165 Investment Fraud Loss

Keep us posted.

Sandy

Thanks. I really enjoyed reading the links, especially the second one by Bill E. Branscum (although his photo reminds me of Charlie Manson), I thought it was very well-written and thought-provoking.