THEFT LOSS VS. CAPITAL
LOSS
At the PIABA conference in Carlsbad, California
last October, there was a common desire amongst
the members, to find that “little twist”,
a value added service that would add something to
the process. We think that our proven process at
IFRN is the “twist” that they are looking
for. We have worked numerous cases for securities
attorneys, as the final step in the recovery process
for their clients. Our work has culminated in the
successful refund of millions of tax dollars back
to the investor. You might want to consider exploring
the opportunities and benefits of incorporating
our standard §165 criteria analysis as the
final step following your arbitration settlements.
The benefit of §165(c)(2) is
considerable, and frequently overlooked by tax professionals
as an option for the investor. Most tax professionals
would not take a case of “churning” for
example, and be compelled to call it “theft”
or “with criminal intent” and then become
subject to supporting that claim with the IRS. Were
the claim denied, their client might face penalties
and interest and the CPA, a possible liability to
deal with.
In most cases when the client is
referred to his tax professional following arbitration,
the tax professional will most likely characterize
the loss as a capital loss carry forward. It’s
simple and its safe. Such common treatment limits
the client to a $3000.00 per year in tax relief and
a 15% rate cap. Compare this against a casualty theft
loss;
Example:
Total remaining compensatory loss to file under IRC
§165(c)(2):$170,162.19
Estimated capital loss carry forward (capped at 15%)
- $25,524.00
Estimated Theft Benefit as Casualty Theft Loss @25%
- $42,541.00
Estimated Theft Benefit as Casualty Theft Loss @36%
- $61,258.00
