Revenue Ruling 2009-9
Internal Revenue Service
2009-1 C.B. 735 (2009)
- Written by Whitney Punzone, JD
Facts
In year 1, A, an individual taxpayer, opened an investment account with B, an investment advisor and securities broker. A contributed $100x to the account and allowed B to use the money to purchase and sell securities on A’s behalf. In year 3, A contributed $20x. B sent statements to A and to the Internal Revenue Service (IRS) showing gains and losses on A’s account. In year 8, A became aware that B’s actions were fraudulent. At this time, B had a small amount of the funds reported on the account statements issued to A. A did not receive reimbursement for these losses in year 8. The IRS issued a revenue ruling to clarify whether and when A’s theft loss was deductible, whether the loss was subject to statutory limitations, whether it created or increased a net operating loss and how to determine such loss, whether the loss qualified for computation of tax for restoration of an amount held under a claim of right, and whether it allowed for tax-liability adjustment as an error not correctible by operation of law.
Rule of Law
Issue
Holding and Reasoning ()
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