removeps-groups[at]yahoo.com wrote:

- quote -

No. Just like worthless stock, you wait until the year when you
actually know the exact amount of the loss. No amendment should be needed.

-Mark Bole

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Aug 29, 3:17 pm, Alan <sfcnm-...[at]yahoo.com> wrote:

- quote -

If your AGI is 100k, your loss of 14k amounts to a deduction of 3.9k,
which is not very useful.

- quote -

The deduction will be on the 2008 return, correct? However, the
return can only be filed once bankruptcy court proceedings are
finished, which can take years. So in this case, file your 2008
return without taking a loss, and amend it later. You have 7 years to
amend a return for bad debt. If by January 2015 the court proceedings
are not done, write to the IRS and ask them if they can extend the
number of years you can take to file an amended return because court
proceedings are not yet done. Since the amount of capital loss
deductible on form 1040 is only 3k a year, with the remaining loss
carried over to next year, you might need to file amended returns for
roundup(14k/3k)=5 years, so keep your original records for 2008 to
2012. If married filing separately, the loss on 1040 is only 1.5k.
In my opinion, the IRS pays pretty generous interest on amended
returns.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Mark & Alan - Thank you for your replies.

Dan

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Dan wrote:
- quote -

take an ordinary loss (misc. itemized deduction) for the ~$14000.

You have two choices:
1. Take a casualty loss in 2008 based on a reasonable estimate of
the loss.
2. Wait until you know the actual amount of the loss and deduct
it as a nonbusiness bad debt (Schedule D, Short Term Loss).

Casualty losses are subject to the following:
You first deduct $100 from each casualty incurred in the year.
Then all casualties are subject to a floor of 10% of AGI. In
other words, you only get to deduct the amount (after the $100
adjustment) that exceeds 10% of AGI.

The nonbusiness bad debt method, treats the loss as a short term
capital loss once you know the actual value of the loss. First
you offset short term losses against short term gains. Then you
offset long term gains against long term losses. Then you add the
two to eventually arrive at either a net capital gain or loss. If
you have a net loss, you are limited to a maximum deduction of
$3000 against your ordinary income. The balance of any unused
capital loss (short & long) gets carried over to the next tax year.

See Pub 547 for more details on casualty losses. See Pub 550 for
mored details on nonbusiness bad debts.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Dan wrote:
- quote -


See IRS Pub 550. The choice to claim an ordinary loss, subject to
2%-AGI limit, on schedule A is precluded since part of your deposit was
federally insured.

The two remaining choices are to take a casualty loss, but that is
reduced by 10% of your AGI (applied to the sum of all casualty losses)
plus $100 for this incident, probably not helpful but at least you can
do it this year.

Otherwise, wait until the final amount of the loss is known, and report
it as a short-term capital loss.


-Mark Bole

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

My wife & I had deposits at the failed IndyMac bank in CA. As it now
stands, ~$28,000 of our deposits was not insured, of which the FDIC is
paying half, leaving us out ~$14,000. Assuming the FDIC is not able to sell
the bank or it's assets before the end of the year (or EVER) to repay a
meaningful amount of this loss, what are the tax implications? Can the 14K
simply be handled as a capital loss, or is there a more favorable way to
deal with it at tax time?

Thanks in advance,

Dan

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >