Can Could we claim for Tax credit if our traditional IRA investment turned out to be Fraud?
Last August/12 we rolled over our matured Traditional IRA’s to the high interest rate CD’s FDIC insured by Standard Chartered Bank offered by Eton Capital Group on the website. Unfortunately after we wired the money to Hongkong, we realized they were fraud because none of the other official documents as new custodians for our IRA’s were never received. Their website disappeared including the phone no. of their company in Beverly Hills, Ca. We have all the transaction documents including the CD certificates, wire transactions, bank checks and letter from citibank stating their inability to recall our funds. We lost a total of $403,000. According to the FBI and Homeland Security, they are investigating but, we should consider the money gone bec. the money were sent overseas. We( my husband and I) are retired and 66 years old.
My question is: Could we write off our loss and and if yes, how much. We have other IRA savings we plan to get distributions when we reach 70.5 years
Thank you,
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Permalink Submitted by Alan - IRA critic on Tue, 2013-02-05 23:39
Sorry to hear of your loss, but hope others can learn from it. Stay in touch with authorities, as if there is any recovery you might be able to make a restorative payment back to your IRA account for your share of the proceeds. These cases can take years, so you will need to be very patient. Meanwhile, the usual write off for large IRA losses will not help you unless this was a Roth IRA and you closed out all your Roth IRAs. There would be a misc deduction for the loss. But for a traditional IRA that is pre tax, if you are in the 25% bracket, look at this as a loss of 300k for you and 100k for the US Treasury as you would have paid 25% tax on the distributions. But since no taxes were paid on the contributions, there would be no misc deduction even if you closed out all your traditional IRA accounts, and you would not do that in any event because you have other IRA accounts for which closure would be current taxes with no offsetting deduction.