4684 and Ponzi Scheme Question

[sortofred]

I have TT Deluxe 2019 and have attached the form 4684 (via going to "forms" in TT and using "open form") and filled in the information relating to a Ponzi scheme loss incurred in 2019.  I notice that after filling out the worksheet that only pages 2 and 3 are attached to the return (as they are the only pages that numbers and info is populated on if due to a Ponzi scheme).  However Page 1 of form 4684 is not attached, nor can I seem to get it attached although all it would be is a blank page 1 (except my name and SSN at top).  My question is:  is this ok to file with only pages 2 &3 attached of form 4684 as it relates to Ponzi scheme theft?  Or do I need page 1 of this form as well?  And if so,  how do I get TT deluxe to attach page 1?

Thank you for any assistance you can offer.

[macuser_22]

Sorry, but the TCJA (Tax Cuts and Jobs Act) eliminated casualty and theft losses (other than for certain disaster caused losses) for tax years 2018-2025.     Ponzi losses are no longer deductible on a Federal tax return.    The form is still there to report disaster losses and for some states that still allow the loss on a state tax return.

The TurboTax interview mode should inform you of that, but if in the forms mode than you are on your own to understand the current tax law.  See screenshot.     Such losses can only be used as a capital loss to offset capital gains.

See Pub 547 page 2

https://www.irs.gov/pub/irs-pdf/p547.pdf

[sortofred]

Thank you for your response however I looked at the 4684 Tax Form instructions and it still does allow for Ponzi losses that meet certain criteria according to Revenue procedure 2009-20, which mine does.  

So, my question as to attachment of just pages 2-3 of the form or if I need to also have page 1 of the form attached as well (although in factt it would not have any figures on it) would still be viable I believe.

[macuser_22]

The instructions say no.   It says section C (Page 3) and section B (Page 2) only.

If you qualify to use Revenue Procedure
2009-20, as modified by Revenue Procedure
2011-58, and choose to follow the procedures
in the guidance, first fill out Section C to
determine the amount to enter on Section B,
line 28. Skip lines 19 to 27. Section C of Form
4684 replaces Appendix A in Revenue
Procedure 2009-20. You don't need to
complete Appendix A.

[sortofred]

Thank you!

[Fanm257]

I have a Ponzi scheme filing under the Safe Harbor Treatment using Revenue Procedure 2009-20. 

I am filling out Section C Part I of form 4684 with line 51 amount is going to Line 28 of Section B Part I.

Even through TT doesn't deal with Ponzi Schemes, where does this amount on line 28 of form 4684 gets reported? Does it go to Schedule 1 Item 8z (Other Income)?

In doing some research and speaking to the FBI, the IRS does allow Safe Harbor Treatment for Ponzi Scheme victims which doesn't limit losses to $3000

[DaveF1006]

It depends. Are you using online or desktop software? If using the software, you can indicate that this is a Ponzi Scheme on line 5C of the 4684 worksheet.

@Fanm257

[Fanm257]

Thank you.

I am using desk top TurboTax which doesn't deal with Ponzi schemes.

I read that Ponzi scheme get reported back to schedule A somewhere under itemized deductions but not sure where. Does it get deducted from ordinary income? and/ or capital gain?

[PattiF]

You can access Form 4684 with the Desktop version of TurboTax.

To get to the form you would:

• Go to your tax return
• Click Forms in the upper right top of the page
• Then click on Forms in the upper left of the page above TurboTax Premiere 
• Click on Open Form
• Type in 4684 in the Search box
• Choose the last entry, Form 4684 - Casualty & Theft Worksheet, and Click on the blue Open Form Button at the bottom
• Enter the information about the Ponzi scheme and click the box for 5c as @DaveF1006 mentioned above

@Fanm257

[CCnewlife988]

How to I reach the form if I am using online version?