News 24 Jun. 2021
Curtis successfully defends foreign states' procedural privileges in the UK Supreme Court
News 23 Jun. 2021
Ibrahim Elsadig joins Curtis as Partner in Dubai
News 09 Aug. 2021
Curtis, Mallet-Prevost, Colt & Mosle enters into association with Chevalier Law in Singapore.
Event 23 Apr. 2021
Partner Borzu Sabahi to speak on Damages, Enforcement and Annulment of Arbitral Awards at Executive Training Program hosted by the Government of India and the Indian Institute of Foreign Trade
Client Alert 18 Oct. 2021
Senior Associate Martin Wolff Discusses Practical Questions with Regard to the German Implementation of the EU Directive on Cross-Border Tax Arrangements (DAC6) in Institutional Money
News 18 Oct. 2021
Jan Krupski Joins Curtis as a Partner in Frankfurt
News 15 Oct. 2021
Claudia Frutos-Peterson and Elisa Botero Ranked Among the Top 100 Female Lawyers in Latin America by Latinvex
News 13 Oct. 2021
Curtis Joins The Appellate Project to Promote Appellate Practice to Diverse Law Students
Client Alert 15 Oct. 2021
Recent change in Dubai’s Arbitration Landscape.
News 20 Sep. 2021
Curtis Successfully Defends the Sultanate of Oman and Oman Aluminium Rolling Company LLC in U.S. Department of Commerce Trade Case
Client Alert 05 Oct. 2021
Proposed Legislative Changes to Federal Estate, Gift and Trust Taxation
Publications 22 Sep. 2021
Client Alert 24 Jun. 2021
U.S. Insight: Update on Virtual Notarization (Executive Order 202.7) During the COVID-19 (Coronavirus) Pandemic (Updated: June 24, 2021)
U.S. Insight: Update on Virtual Witnessing (New York Executive Order 202.14) During The COVID-19 (Coronavirus) Pandemic (Updated: June 24, 2021)
Publications December 2008
The US tax implications of a Ponzi scheme are complex and each investor's situation is unique. Therefore, the comments provided herein are not tax advice but rather illustrative of the tax issues that may arise. Each investor should immediately consult with an experienced tax professional since certain actions that an investor should take may be very time sensitive. The material contained in this Client Alert is only a general review of the subjects covered and does not constitute legal advice. No legal or business decision should be based on its contents.
The following describes some of the tax issues that an investor in a Ponzi scheme may face. To illustrate, consider the following hypothetical taxpayer, Investor A, who in 1998 acquired an ownership interest in a fund (the 'Fund') for $1 million which has never been returned. Each year, Investor A believed (based on his Form K-1) that he was allocated $120,000 of the Fund's income. He paid annual income taxes of $42,000 on such income. In 2008, Investor A discovers that the income purportedly allocated to him did not exist, and his initial investment of $1 million has been used to pay other investors.
Theft Loss Deduction
Filing a Refund Claim for Tax Paid on Allocated Phantom Income