The losses incurred in a Ponzi scheme may be deductible as theft loss under Sec. 165(a) as an ordinary deduction in the year the loss was discovered, with certain limitations. A taxpayer cannot deduct losses as long as there is a possibility of recovery and litigation is ongoing.
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Individuals
Sec. 121 Planning Opportunities After the Housing Assistance Tax Act
The Housing Assistance Tax Act of 2008 (the Housing Act) implemented major revisions to Sec. 121.
IRS Explains How Unmarried Taxpayers Allocate First-Time Homebuyer Credit
The IRS has issued Notice 2009-12, explaining how the Sec. 36 first-time homebuyer credit should be allocated between unmarried taxpayers who buy a principal residence together.
The Importance of Proper and Timely Hedge Identification
In general, failure to properly identify a hedge for tax purposes may expose a taxpayer to ordinary treatment of gains and capital treatment of losses (i.e., character whipsaw).
Ex-Wife’s Share of Military Retirement Payments Is Subject to Tax
The Tax Court held that a taxpayer’s share of her ex-husband’s military retirement payments was subject to tax despite the fact that a domestic relations order specified that taxes were to be withheld from the payments before the taxpayer’s share of the payments was determined.
Claiming Ordinary Losses for Sec. 1244 Stock
Sec. 1244 encourages new investment in small business by permitting investors to claim an ordinary (rather than a capital) loss on the disposition (including worthlessness) of qualifying small business stock.
IRS Issues Guidance on Determining Wagering Gains and Losses
The Office of Chief Counsel issued a memorandum explaining how to determine the wagering gains and losses of casual gamblers.
Dependency Status for a Child of Divorced or Separated Parents
Only one dependency exemption is allowed for a qualifying child and, since a single exemption cannot be shared, only one parent may claim it. As a result, there is often confusion and/or conflict between the parents.
Adapting Accounting Education to the Generations: Working with the Millennials
The changing characteristics of college students provide a challenge for accounting educators and employers.
Individual Taxation: Filing Season Update
This article covers recent significant developments affecting taxation of individuals, including cases, regulations, and legislative changes, and important information for the upcoming filing season.
Volunteer Board President “Responsible Person” for Payroll Taxes
Taxpayer who served (without compensation) as the president of a daycare center was responsible person under Sec. 6672.
AICPA Comments on Charitable Contribution Substantiation Prop. Regs.
The Forensic and Valuation Services Executive Committee and the Tax Executive Committee of the AICPA have sent comments to Treasury on proposed regulations’ provisions regarding appraisals and individuals performing appraisals.
Lenders Allowed Nonrecognition Treatment for Certain Securities Loans Terminated Due to Bankruptcy
Rev. Proc. 2008-63 permits securities lenders continued nonrecognition treatment under Sec. 1058(a) for certain securities loans terminated due to the bankruptcy of the securities borrower, provided the lender applies the collateral to the purchase of identical securities within 30 days of the default.
New Rules Seek to Reduce Tax Advantages of Converting Second Home to Principal Residence
Beginning January 1, 2009, the full $250,000/$500,000 exclusion under Sec. 121 will no longer be available on the sale of a taxpayer’s principal residence if the residence was subject to nonqualifying use prior to its ultimate disposition.
Economic Stabilization Act Extends Expired Provisions and Repeals MLTN Standard
The Emergency Economic Stabilization Act extends various tax benefits that expired at the end of 2007 and repeals the “more likely than not” standard for return preparers
Reminder: Support Your Auto Expense
Editor: Michael D. Koppel, CPA, PFS Auto expenses are a very common deduction for business owners and employees who must travel. Often the taxpayer does not know the exact amounts necessary to calculate the proper deduction and the tax preparer must estimate the mileage, business percentage, and ultimate auto deduction
Nonphysical Injury Awards After Murphy
The taxation of nonphysical injury awards is far from settled, and taxpayers and practitioners should be diligent in monitoring future developments.
Widow of 9/11 Victim Is Not a Terrorist Victim
A federal court ruled, in a case of first impression, that a widow who committed suicide after her husband was killed in the 2001 World Trade Center attack does not qualify as a victim of terrorism and therefore her estate does not qualify for the reduced estate tax rates under Sec. 2201(c).
Income Splitting: Issues and Opportunities
Tax law generally prohibits a parent from shifting income from personal services to a child; however, a parent can in some cases effectively shift income to a child by transferring income-producing property to the child.
IRS Provides Guidance on Contributions to HSAs
The Tax Relief and Health Care Act of 2006, P.L. 109-432, made changes to the treatment of contributions to health savings accounts (HSAs) under Sec. 223. The IRS issued two notices explaining those changes.
INDIVIDUALS
Current Developments in Taxation of Individuals: Part 1
This update surveys recent federal tax developments involving individuals, including court cases, rulings, and guidance issued during the six months ending October 2025.
