Ponzi Scheme 1099

Forum|Forum|2 years ago
February 5, 2024
1 reply
7 views

I was involved ina Ponzi Scheme. He went to trial in 2023 and is in prison. We will be getting a part of our initial investment back once everything is sold and maybe more if he makes money when out of prison. I'm not worried about that part as much as all of the 1099's that I claimed from 2009 through 2020.

Can I add up the fake 1099 income and put it on my 2023 tax form as theft?

I have read so much about ponzi schemes and how to get your investment back but nothing on how I can get a return on all the income that I claimed that I never actually had in the long run.

Does anyone have a simple answer for me on what to do with these fake 1099's? Thanks

Not A Product Question

DianeW777

Level 15

it depends. The scheme is defined in the following federal links. It's important to review for your specific situation, the year of the known loss, recovery year or years.

Help for Victims Of Ponzi Investment Schemes - Click the FAQ links as well.
The Revenue Procedure 2009-20 is the simplified compliance.

You will use Form 4684, Section C to claim your loss if applicable. Note that recovery in a future year will be income after taking the loss.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

craftymom1Author

Level 2

I've read all of those publications. If I've read everything correctly that form is for collecting a percentage of your investment etc. I am not concerned at all regarding that part.

My concern is where I put the amount from the 1099's that I received. I did not really have that income so I want to show that my income was a lot less than what I had inputted on my tax forms.

Does anyone have an answer to that exact question?

DianeW777

Level 15

It's not that simple because it is a Ponzi scheme and you will collect money based on your first question.

Understanding any money received in a future year will be income, you can use the 4684 to enter your Ponzi investment loss in 2023* using Form 4684, Section C. Based on parts of your question you know what the loss is that you sustained (only amounts previously reported as income), this is your loss assuming you have not yet received income repayment.
- *Assumptions that your total loss was declared and used in the court case in 2023 or you have other definite evidence.
This will be carried to your Schedule A and included with other itemized deductions.

Note: If you know the amount of any collections/repayments for 2024, then your loss should be reduced by those specific and definite amounts on the 2023 tax return.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"