In article <Xns9BAB9089DDDF8spamtraplexregiacom[at]130.133.1.4> , spamtrap[at]lexregia.com (Stuart A. Bronstein) writes:
| Kurt Ullman <kurtullman[at]yahoo.com> wrote:

| > It is also possible for the Courts to order you to give back
| > the proceeds, which would have an impact. I don't remember how far
| > back that would go.
|
| Under federal bankruptcy law probably not more than one year. Under
| state fraudulent transfer laws it could be a lot longer.

Here is the thread I was thinking of before:

http://groups.google.com/group/misc....ef9ae306ec0e2c

It seems to me that you could get some interesting effects depending on
what exactly you define as the pyramid scheme(s). If different
jurisdictions make different determinations it could be unpleasant.

Say you invested in some Madoff products early on, took your profits,
and bought other securities which you held at Madoff's broker/dealer.
SIPC is liquidating the broker/dealer along with the investment advisory
company and they seem to be saying that there are no/few assets to return
to the brokerage customers. If SIPC decides it's all one big pyramid
scheme (not that I'm sure they get to say other than for their own
insurance purposes) then you are probably ok in the sense that you don't
have to return anything. On the other hand, an investor who didn't fund
his security purchases with Madoff-derived proceeds loses out because SIPC
will limit his recovery to his investment (and ask him to prove that basis)
rather than pay on the current market value (up to the $500k limit) as I
think they would for a "normal" brokerage failure/theft.

Now what happens if some jurisdiction decides that there are multiple
pyramid schemes and/or that the broker/dealer failure isn't really part
of those schemes? Maybe from their perspective you made money on the
pyramid scheme and happened to lose that money later because of a
brokerage failure. Do you have to pay back the proceeds you never
really had?

Of course, I'm assuming that it was possible for Madoff brokerage
customers to hold non-Madoff products in their accounts. If that is
not the case then things are a little better, but I wouldn't be
surprised if some court decided that an investor who made a profit in
Madoff pyramid scheme #1 and lost it in Madoff pyramid scheme #2 had
to pay back the losers in #1 and try to recover from the winners in #2.
I predict that this will drag on for a long time...

Dan Lanciani
ddl[at]danlan.*com

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Kurt Ullman <kurtullman[at]yahoo.com> wrote:
- quote -

Under federal bankruptcy law probably not more than one year. Under
state fraudulent transfer laws it could be a lot longer.

Stu

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In article <gmiqs8$kll$1[at]blue.rahul.net> ,
spope33[at]speedymail.org (Steve Pope) wrote:

- quote -

It is also possible for the Courts to order you to give back the
proceeds, which would have an impact. I don't remember how far back that
would go.

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In article <gmiqs8$kll$1[at]blue.rahul.net> ,
Steve Pope <spope33[at]speedymail.org> wrote:
- quote -


Proving once again that tax law is very complex. With real and
imaginary parts.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

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ed <edcosoft[at]sbcglobal.net> wrote:

- quote -

My assumption is if you reported Madoff income in the past
3 years, you could amend your returns to non-report it
as it is imaginary.

Steve

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Alan <sfcnm-mtm[at]yahoo.com> wrote:

- quote -

There's also an element of theft loss, though I don't know how it would
work in this situation.

Stu

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

ed wrote:
- quote -


“Additionally, I am talking to my colleagues in Congress about
allowing defrauded investors to go back more than the three years
currently permissible in tax law to deduct their losses. This
allowance has been made in prior years for disaster victims and
should be seriously considered for victims of this abhorrent
theft as well.”

One can deduce he is not referring to NOLs as they are a 2 year
carryback.

My guess is that he wants to allow a 6 year look back instead of
3, for amending a tax return to obtain a refund. Any gains or
income declared by the investors in those years never existed or
allegedly never existed. As taxpayers may have paid tax on phony
income, they would be entitled to a refund.

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On Feb 5, 2:53*pm, spop...[at]speedymail.org (Steve Pope) wrote:
- quote -

I must be missing something here. These are not NOL which can be
carried back, so what part of Madoff losses can be carried back 3
years now?

It would be nice if they defined NOL to include Capital Losses. I
could then offset the gains I ipaid tax on in 2007 with the losses I
incurred in 2008.

ed

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Seth <sethb[at]panix.com> wrote:

- quote -

Wexler's proposal could morph into something akin to disaster
declaration relief. If the administration "declares" that
a Ponzi scheme has happened, the taxpayer gets relief. There
have been at least a hundred of them in recent years. One
media article on the subject described about a dozen Ponzi's,
and it didn't even mention a pretty large one that a colleague of
mine was caught up in.

The next step would be reporting requirements for Ponzi
operators, akin to the reporting requirements for abusive
tax shelters. That would give the feds a basis for prosecuting
the agents and salespersons.

Steve

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In article <19a36aeb-e1ff-443f-98bb-a1ef8a6505f9[at]n33g2000pri.googlegroups.com> ,
joeu2004 <joeu2004[at]hotmail.com> wrote:
- quote -

What about other victims of crimes who just happened to pick a
criminal who wasn't as high-profile as Madoff?

Seth

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Dan Lanciani <ddl[at]danlan.*com> wrote:

- quote -

It means that interest income reported in the past, but proved
to be a phantom fictional number, can validly be removed via an
amended return. Under the Wexler proposal taxpayers could
go back further than the normal three years for amending returns.

With or without such a proposal they can of course claim their capital
loss.

- quote -

I should hope so... the SIPC doesn't need its insurance pool,
which protects normal investors and then only on cash deposited
with a broker (not investments), depleted to pay for this.

Steve

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Dick Adams wrote:
- quote -


ChEAr$,
Harlan

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On Feb 4, 2:08*pm, ddl[at]danlan.*com (Dan Lanciani) wrote:
- quote -

It means a Florida politician is currying favor from his
constituents. Nothing more.

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rdadams[at]panix.com (Dick Adams) wrote:

- quote -

I guess it's because the total loss was so large. The government likes
to come to the rescue of the victims of huge problems, while not
bothering with others who may have suffered just as much or more, but
their individual problems were not the subject of news articles all
across the country.

Stu

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US Rep. Robert Wexler (D-Florida) wants Congress to allow Madoff's
investors to go back more than three years to deduct their losses.
While this is a compassionate idea, why not a three year carry
back for everyone - not just victims of a specific investment.

Dick

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