The following is a summary of an important tax development that has occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call us for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable.
Loss deduction OK’d for estate that suffered Ponzi losses through an entity. The Tax Court has allowed an estate to claim a theft loss deduction for losses incurred by a limited liability company (LLC) in which it held a 99% interest. The LLC’s sole asset was an account that, during the settlement of the case, became worthless as a result of Bernie Madoff’s Ponzi scheme. The losses were allowed under a tax code provision (Sec. 2054) allowing estates a deduction for casualty losses incurred during the settlement of the estate, including losses arising from fires, storms, shipwrecks or other casualties, or from theft, if the losses are not compensated for by insurance or otherwise.