@69VanNuys wrote:
Thank you @Critter-3 and others that commented. The broker says the liquidation distribution will be reported as a sale in a 1099B. Still leaves open a question on the remaining assets of the fund that are not yet distributed and how I treat that "investment."
Do you expect to take a loss (receive less than your original investment)? Or you will receive less than you were told your assets were worth, but still more than your original investment.
If you will have a gain, just less than you expected, then I concur with @Mike9241 's answer below. I don't think the Ponzi scheme rules would be allowed or beneficial to you.
generally, in situations like this, the IRS would say any loss is contingent until the final distribution is made. you don't know what your loss will be. at best you would have an estimate.
so it's likely the broker will report the proceeds but provide no cost basis. if so, report cost equal to proceeds. you'll take any loss in the year the final distribution is made.
