Many may remember in 2008 the chaos at the I.R.S. about how to deal with the Madoff Ponzi
In 2008, the Internal Revenue Service was not ready to solve the Madoff disaster. However, they quickly did the best that they could and published two documents to at least help the victims of this scheme. The two documents provided some relief to injured parties.
These two documents were sorely needed and well done.
While they could not stop “Ponzi Schemes”, they have lessened the blow on injured parties. These two seminal documents spelled out the treatment for “Ponzi Schemes” in: (1) a revenue ruling, and (2) a revenue procedure that would govern the treatment of “Ponzi Scheme” victims.
The first document is a revenue ruling (Rev. Rul. 2009-9). This ruling describes the proper income tax treatment for losses resulting from “Ponzi Schemes”. The second document Revenue Procedure 2009-20 provided the procedures for a simplified, unified way of dealing with “Ponzi Schemes” and their investors. These two documents are the heart of this review found here: FTX / Sam Bankman-Fried Survival Kit.
It is important for FTX / SBF Ponzi victims to know that they have options, but they must act during this tax season to get started – since it is also the “year of discovery” of this Ponzi. Reminder. . . the IRS will be asking everyone if they were involved with any crypto trading in the year 2022 – everyone must answer Yes or No. Value can be lost without good professional advice.
Contact Richard S. Lehman, U.S. Tax Attorney:
