"Stuart Bronstein" <spamtrap[at]lexregia.com> wrote in message
news:Xns9B13B068D74DBavocatstuyahoofr[at]130.133.1.4...
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No, he won't - for the reason already posted. No deduction in 2008.

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NadCixelsyd <nadcixelsyd[at]aol.com> wrote:

- quote -

He will be taxed on his income in 2004 and 2005. For 2008, when he's
sitting in jail making no money, he'll get a deduction for $390,000.

- quote -

No refunds for 2004 or 2005. He'd still get the deduction in 2008, at
least to the extent he paid it back.

Stu

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- quote -

My favorite court case dealing with this issue is Yerkie v. Commissioner,
circa 1976. I wanted to refer the original poster to the Yerkie case but
couldn't find a public Internet link to it.


Condor

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"D. Stussy" wrote:

- quote -

I suspected that might be the case, which is why I hedged and said "may" be
eligible in the original response. Thanks.

It was so much easier when they finally got to Collection. If there was
anything left after Vegas or wild women, the lawyers already had it.
--
Phil Marti
Clarksburg, MD

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<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

"Phil Marti" <prm20871[at]verizon.net> wrote in message
news:ahZwk.772$sq3.502[at]trnddc07...
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In this case, he's NOT entitled to a claim-of-right deduction because he's
being CRIMINALLY prosecuted. The courts have generally ruled that an
embezzler can use the CoR method only when civilly sued by the victim
without prosecution. (I did this research in the early 1990's when I still
worked at the IRS and was auditing an embezzler).

Authority: IRC 162(f). Repayment in a criminal case is often part of the
fine or penalty.

- quote -

I concur. No tax due as it's already paid.

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- quote -

As always, "It depends." <g
- quote -

Better known as when bad things happen to corrupt people.

Dick

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- quote -

The answer is complicated. See the linked court opinion.

http://www.ll.georgetown.edu/federal...s/99-5110.html


Condor

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"NadCixelsyd" wrote:

- quote -

Rarely a safe assumption, but...

- quote -

Assuming he's a cash-basis taxpayer (almost every individual is) he filed
false returns for 2004 and 2005. IRS will be chatting with him about this
from the civil side. (I'm assuming he has a good enough lawyer that the
criminal aspects of the 2004 and 2005 returns are already being dealt with.)

He may be able to generate a deduction or credit for the year of repayment.
See IRS Publication 525.

- quote -

Well, he wouldn't have any IRS problems on top of his other legal problems.
He'd probably also make the cover of Time magazine as the only person on
record to do so. Come to think of it, he probably should anyway since he
hadn't yet frittered away the money and had it to repay the victim when he
got caught.

--
Phil Marti
Clarksburg, MD

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<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >

A neighbor was just indicted for embezzlement. Here are the facts
assumed from newspaper articles:
2004: embezzle $145,000 but does not declare it on the tax return
2005: embezzle another $245,000, but does not declare it on his tax
return.

August, 2008: He is arrested for embezzlement. The entire $390,000
is refunded in an effort to mitigate the criminal charges.

The IRS has been notified. OK, he "under reported" his income in 2004
and 2005, but what happens (tax wise) in 2008 when his total income is
only $130,000?

And just out of curiosity, what would happen if he HAD declared the
embezzlement on his 2004 & 2005 tax return?

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<< ------------------------------------------------------- > << 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. > << ------------------------------------------------------- >