Updated: IRS Tax Refund Procedures!
On 03/17/09 the IRS unveiled new, more lenient guidelines for tax filers seeking a refund. The guidelines permit a theft loss deduction for the principal amounts invested plus the accumulation of account interest, reflected by 12/31/07 statement values. In addition, it provides an extension of the carry back period to amend your returns from three years to five years.
Please read the following article for more information:
Journal of Accountacy explains ‘Safe Harbor’ - Click here to read
Revenue Proc 2009-26 This procedure provides guidance to taxpayers on electing the 3-, 4-, or 5-year carryback of net operating losses of small businesses under section 1211 of the American Recovery and Reinvestment Tax Act of 2009. Rev. Proc. 2009-19 modified and superseded.
Click here to read full IRS procedure.
Revenue Proc 2009-19 This revenue procedure provides guidance for taxpayers that are eligible small businesses (ESB), covering guidance on the time and manner for making an election of a carryback period, Click here to read full IRS procedure.
Revenue Proc 2009-20 This revenue procedure provides an optional safe harbor treatment for taxpayers that experienced losses in certain investment arrangements discovered to be criminally fraudulent. This revenue procedure also describes how the Internal Revenue Service will treat a return that claims a deduction for such a loss and does not use the safe harbor treatment described in this revenue procedure. Click here to read full IRS procedure.
Revenue Ruling 2009-09 This revenue ruling addresses Theft Loss providing answers and guidance to :
(1) Is a loss from criminal fraud or embezzlement in a transaction entered into for profit a theft loss or a capital loss under § 165 of the Internal Revenue Code?
(2) Is such a loss subject to either the personal loss limits in § 165(h) or the limits on itemized deductions in §§ 67 and 68?
(3) In what year is such a loss deductible?
(4) How is the amount of such a loss determined?
(5) Can such a loss create or increase a net operating loss under § 172?
(6) Does such a loss qualify for the computation of tax provided by § 1341 for the restoration of an amount held under a claim of right?
(7) Does such a loss qualify for the application of §§ 1311-1314 to adjust tax liability in years that are otherwise barred by the period of limitations on filing a claim for refund under § 6511?
Click here to read full IRS ruling.
IRS Form 4684 can be found by clicking here.
IRS Form 4684 Instructions can be found by clicking here.
Is there any hope for legislation to be passed to recoup the taxes paid on phantom income back more then the 5 year carry back allowed.
Both SEC & FINRA now have admitted to gross negligence and since they are arms of the govt. shouldn’t the IRS step up and do the right thing. If the IRS keeps all that unearned money they are as big a theif as Madoff.
Has anyone other then Senator Codey in NJ attempted to introduce legislation to assist those of us who lost entire IRA accounts to use that loss as “theft loss”? also, NJ will not refund taxes paid on “phantom income” has any state refunded the state income taxes paid on phantom income? And, I am unable to get information on where Codeys bill stands………….
In response to mlk:
a. It is my understanding that you cannot elect to carryback an NOL resulting from a theft loss only one year. Pursuant to §172(b)(1)(H) an electing small business can elect a 3, 4, or 5 year carryback for any NOL. If one does not qualify as an electing small business, pursuant to §172(b)(1)(F) they must carry the loss back to each of the 3 taxable years preceding the taxable year of such loss. You should note, that a taxpayer can elect to forgo any carryback and only carry the loss forward.
b. I am assuming that the reduction in the loss is based on the reduction of itemized deductions under NYS law. Under the current law, taxpayers that have adjusted gross income over certain amounts must reduce their itemized deductions by 25% or 50%, as the case may be. Unless new legislation comes out, this is unavoidable.
Hi. I’m looking to confirm tax info on to issues, kindly:
1. Under the safe harbor rules, can one elect to go back only one (1) year or is it mandatory that you go back at least three (3)?
2. For New York recovery, there seems to be a large amount by which you must reduce your loss to carry back. In my case it appears to be nearly 1/4 of the loss, thereby reducing my tax recovery by a significant amount. Is this unavoidable?
Thank you so much.
is there any chance of fraud loss from ira account. all my losses were in ira