Tax Law Updates | New Statutes, Regulations, and Rulings
February 1, 2010
IRS Issues Guidance to Assist Victims of Ponzi-Type Investment Schemes
Revenue Ruling 2009-9 and Revenue Procedure 2009-20
Rev. Proc. 2009-20, Rev. Rul. 2009-9, 4/6/2009
The Internal Revenue Service (“IRS”) has issued two guidance items to assist taxpayers who are victims of losses from Ponzi-type investment schemes. Revenue Ruling 2009-9 clarifies the income tax law governing the treatment of losses in such schemes. Revenue Procedure 2009-20 provides a safe-harbor method of computing and reporting the losses.
According to the IRS, the revenue ruling is important because determining the amount and timing of losses from these schemes is factually difficult and dependent on the prospect of recovering the lost money (which may not become known for several years). In addition, it clarifies the reach of older guidance…
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