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NY Madoff Victims Can Write-Off Losses

In ongoing efforts to assist Bernard Madoff Ponzi 007 Dr. No movies Samson and Delilah movie scheme victims, newly issued tax guidelines are in effect in New York State to enable those duped by the shamed financier to write off their losses as “theft.” Newsday reports that write-offs must be made on itemized tax deductions […]

In ongoing efforts to assist Bernard Madoff Ponzi 007 Dr. No movies Samson and Delilah movie scheme victims, newly issued tax guidelines are in effect in New York State to enable those duped by the shamed financier to write off their losses as “theft.” Newsday reports that write-offs must be made on itemized tax deductions and that guidelines follow similar protocols recently put in place by the Internal Revenue Service (IRS).

In March, the IRS announced that investors could claim such losses as theft, said Newsday, which explained that in doing so, higher deductions than capital, personal theft, and personal casualty loss are enabled. Taxpayers who filed 2008 state tax returns can submit amended returns, according to officials this week, said Newsday.

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The amount of fraud qualifying as a write-off is limited by New York’s tax laws on itemized deductions, which are reduced by up to 25 percent for individuals earning over $100,000 in adjusted gross income and married filers earning over $200,000 in adjusted gross income, and up to 50 percent for all filers earning over $475,000 in adjusted gross income. For the 2009 tax year, taxpayers with an adjusted gross income of over $1 million would receive no noncharitable itemized deductions, which means that there would be no theft deductions, said Newsday. Those payers are able to claim 50 percent of charitable contributions, Newsday pointed out.

According to Newsday, the new federal and state tax guidelines followed not only the highly publicized and historic Madoff scam, but also the $413-million Ponzi scheme allegedly organized by Nicholas Cosmo. Cosmo was president of Agape World Inc., a Long Island, New York firm based in Hauppauge, which made high-cost bridge loans, explained Newsday.

Madoff pleaded guilty to 11 fraud counts on March 12. The former chairman of the NASDAQ stock exchange ran an investment advisory business for decades that was, in reality, a Ponzi scheme. Last November, Madoff told his investors his fund held over $64 billion, but in reality, it only held a mere fraction of that amount. Because Madoff’s Ponzi scheme went on for decades, it is suspected that he was far from the only person in his circle who knew of the swindle. It’s known that several people close to Madoff—including key employees, as well as his wife, sons, and brother—were among those close to him caught up in the probe.

Most recently we reported that over 200 investors in Madoff’s $65 billion Ponzi scheme were moving closer to recouping some of their lost funds, according to ABC News, citing Irving Picard, the appointed bankruptcy trustee charged with liquidating Madoff’s assets. Picard was hired by the Securities Investor Protection Corporation (SIPC) to recover some of the $65 billion Madoff’s investors lost to his scam. So far, Picard has been able to collect $1.22 billion as a result of his efforts. Picard said his office has received close to 9,000 claims from swindled investors and called Madoff’s scam the “most complicated and far reaching financial fraud in U.S. history,” quoted ABC News.

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ABC News reported that letters were recently issued to commit over $116 million to satisfy claims from the some 237 Madoff victims expected to receive up to $500,000 from the SIPC. This is part of the hardship program Picard initiated that will enable individual victims experiencing significant financial hardship to file a special claim that seeks “an accelerated federal insurance payment,” Picard announced, said USA Today previously, with each applicant eligible to qualify for up to $500,000.

According to an earlier Bloomberg.com report, Picard has filed several claw back lawsuits seeking a total of $10.1 billion in profits withdrawn by Madoff investors that he claims should have known of the fraud. Picard is also seeking about $735 million from Madoff customers outside of court. Sadly, in spite of these efforts, most experts expect that Madoff’s former investors will only recover pennies on the dollar.

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