More Tax Planning for Madoff Victims

Following up on my prior posts:

• Tax Law to Provide Bailout to Madoff's Victims (12/18/08)
• More on Tax Planning for Madoff Victims (12/30/08)

Steven H. Sholk & Peter J. Ulrich (both of Gibbons, Newark) have published Federal Income Tax Treatment of Investment Losses From L'Affaire Madoff:

Investors in Bernard L. Madoff Investment Securities LLC (the "Madoff Firm") are now addressing the federal income tax treatment of their losses from their investments in the Madoff Firm. Determination of the proper tax treatment depends on whether a person invested with the Madoff Firm directly (a "Direct Investor"), or through a hedge fund that invested that person's capital contribution to the hedge fund in the Madoff Firm (a "Hedge Fund Investor"). Each Direct Investor and Hedge Fund Investor will need to evaluate the Investor's entitlement to a theft loss deduction, the year in which to claim this deduction, and the ability to file amended returns for prior open years for phantom income reported from the Madoff Firm.