IRA’s no value due to bankrupt life settlement scam
Client invested over 200k of their IRA’s many years ago with a firm in Texas handling life settlements (not my firm).
A few years ago the investment firm was indicted on fraud charges/investment scam
Today’s IRA value is approx. $15,000 and they don’t know if they will get that back at all.
Question:
a. can they write the loss of the IRA’s off as a tax loss?
or
b. No they can’t since they were tax deferred investments?
Thank you for any other help in the matter,
Douglas
Permalink Submitted by Alan - IRA critic on Wed, 2018-11-21 20:22
IRA total closures for less than the IRA basis used to generate a misc deduction if client itemizes. However, these deductions were eliminated by the recent tax bill (TCJA). But if this is not a Roth IRA, there probably was little or no basis in the IRA to begin with, the reduction of value being pre tax dollars.