TAILIEUCHUNG - The Madoff Tax Losses Is the Safe Harbor Worth it?

Tham khảo sách 'the madoff tax losses is the safe harbor worth it?', kinh doanh - tiếp thị, quản trị kinh doanh phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | REPORT NO The Madoff Tax Losses Is the Safe Harbor Worth it Much has been written about the two documents released by the . regarding the taxation of Ponzi schemes. There is Revenue Ruling 2009-9 the Rev. Rul. in which the . has clarified much of the unsettled law in this area. Likewise there is Revenue Procedure 2009-20 the Rev. Proc. which provides an uncomplicated path through the law and will be helpful to thousands of Madoff victims who will have a short route to cash refunds from tax losses. This will be sorely needed by many. This is provided in what the . calls a safe harbor procedure. The two documents by IRS are a good package and drafted in record time for any government agency. The . worked well. HOWEVER IT IS IMPORTANT TO REMEMBER IRS IS NOT IN BUSINESS TO GIVE BACK MONEY. The safe harbor needs to be carefully studied because it is a safe harbor that could be extremely expensive from a tax standpoint. It might be a safe harbor but the tax cost to dock your boat in this harbor could be very high. ONE VERY SIMPLISTIC EXAMPLE. Assume that there is 30 Billion of Madoff losses that would be able to receive theft loss tax benefits. Assume this Madoff income or amounts of principal when taxed were in the highest tax brackets. This is because most earners of Madoff phantom income had other sources of taxable income. Therefore again to keep it simple assume the average tax bracket is 35 for the Madoff income included in prior years. Taxes collected Billion 35 x 30 Billion . Assume these Madoff losses are deducted in 2008 and used against income for the years 2003 through 2007 as loss carry backs from the theft loss deduction. This will mean that Madoff income and Madoff investments of principal that have been taxed at the highest brackets will be carried back and applied against all of the income in a particular year. To a large extent these losses will offset income in each prior year that was earned at lower

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