I filed a Form 4684 in 2012 using the 2009-20 safe harbor instructions. I received a partial refund of the initial investment and was able to deduct $3896 on my return. However I still have a balance of the loss outstanding. The company was put into a receivership and the lawsuit was settled in 2023 and payments were sent to the claimants. I received a 1099 Misc from the settlement. Can I deduct the balance of the loss from the payment and then just pay tax on the excess the amount I have been able to deduct previously?
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2012 or 2021? it makes a difference because the tax laws have changed. was it a ponzi type scheme
Yes. It was a fraudulent investment that the company went bust. It was put into receivership in 2012. It took this long to settle as it was. The USA and foreign claims. I received a partial payment in 2012 and filed
the Form 4684 then. The final payment was last year (2023). The total of payments and the tax deduction. I took I 2012 now exceed the investment by $335. I have seen on line that I add the 1099 Misc and an adjustment to income of the -$4814 I had left to balance out the payment.
Will I receive an answer on how to proceed with this year taxes and potential settlement of loss
yes.
It appears you would have reported this as a theft loss on Schedule A carried from Form 4684, as Ponzi schemes were reported as a theft in 2012. It's unclear why you would still have a balance of loss that was not used when you filed the loss in 2012 or why you would have any type of loss unrecovered.
You would report as income from your 1099-MISC as follows up to the amount of loss you already claimed (reduced taxable income) on your 2012 tax return.
Other Miscellaneous Income:
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