Cross border insolvencies and financial restructurings are remarkably opaque considering we live in the Information Age. The mission of the Centre of Main Interest (the COMI) is to light some candles in the darkness and create a forum for further discussion. The Law Offices of Tally M. Wiener, Esq. are pleased to publish the COMI blog.
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Thursday, October 25, 2012
New IRS Guidance for Ponzi Scheme Clawback Victims
So far the IRS has posted answers to two questions:
1. How does a taxpayer treat the repayment of a clawback?
2. What does the taxpayer need to establish as to whether the repayment of a clawback is allowable as a deduction (or a § 1341 credit)?
The IRS' efforts to assist Ponzi scheme victims is commendable, and the information provided should prove to be helpful. Still, any investor who has experienced the misfortune of having to write a check to the trustee of a Ponzi scheme on a clawback claim is strongly advised to seek professional assistance in properly determining the tax consequences. The last thing a Ponzi scheme victim needs is trouble from the IRS! . . . .