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Foundations, Ponzi Schemes, and §4944  


Author:  Staff Editors.


Source: Volume 08, Number 05, July/August 2009 , pp.1-4(4)




Family Foundation Advisor

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Abstract: 

In our last issue we ran an article suggesting that the threatened application of the jeopardy investment rules of IRC §4944 to “investments” by foundations in the Bernard Madoff Ponzi scheme would be inappropriate in light of the fact that the IRS had already held, in Revenue Ruling 2009-09, that Madoff-style losses incurred by individuals would be giving rise to theft loss deductions rather than capital losses. Treating these as investment losses for foundation victims seems completely inconsistent.

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