IRS Expands Definition of Qualified Loss for Ponzi Scheme Victims

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IRS expands the definition of a qualified loss under tax code Section 165 to include situations where the lead figure in a Ponzi scheme has died. Revenue Procedure 2011-58 expands the definition of a qualified loss to include those resulting from a specified fraudulent arrangement in which the death of the lead figure precluded a charge against that figure by indictment, information, or criminal complaint. “Since the publication of Rev. Proc. 2009-20, the deaths of some lead figures in Ponzi schemes have foreclosed authorities' ability to charge them with criminal theft,” IRS says in the latest guidance.

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