FTB, IRS guidance for theft loss deductions from Ponzi schemes.

The IRS issued Revenue Ruling 2009-9 (www.calpa.org/IRS09) and Revenue Procedure 2009-20 (www.calcpa.org/IRS20) providing guidance to taxpayers who are victims of losses from Ponzi-type investment schemes.

The Ruling clarifies the income tax law governing the treatment of losses from such schemes, including the nature of such losses (theft losses), the amount of such losses to be allowed, and the year of deductibility. The Procedure simplifies compliance procedures for taxpayers by providing an optional safe-harbor means of determining the year in which the losses are deemed to occur, and a simplified method of computing the amount...