Sunday, December 25, 2011

Determination of Primary Candidates

There is something wrong with a process that keeps plausible national candidates off of a major political party's primary ballot. Not fhat I would vote for either one of them (Perry and Gingrich, I mean) but it just not serve the interests of a democracy, in my opinion.

See RTD story.

Holiday Wishes To All

Merry Christmas, Happy Hanukkah, and best wishes for everyone this holiday season and into the new year.

Sunday, December 18, 2011

Why is a theft loss better than a capital loss?

In my previous post I described a new IRS position on the treatment of losses in Ponzi schemes that will allow some taxpayer-victims to take theft losses instead of capital losses. I didn't say why that is useful.

The Internal Revenue Code allows an individual with a net capital loss to offset $3,000 of ordinary taxable income each year until that loss is exhausted. So, if a person had, for example, a $51,000 capital loss (and no capital gains), that loss would be deducted over 17 tax years.

On the other hand, a personal theft loss is immediately deductible (1) if the taxpayer itemizes deductions and (2) after taking away $100 and 10% of adjusted gross income. So, a taxpayer with, for example, $100,000 of other taxable income and a $51,000 theft loss, would have a $40,900 deduction in the year of the loss.

So which is better, deducting $3,000 per year for 17 years or deducting $40,900 immediately? That is up to the taxpayer who has been victimized by a Ponzi scheme.