[Dutton]

Fellow RF Mates,

I posed Rons' question to my son, Matthew, who is now an associate with Clark Nuber PS, a CPA firm in Bellevue, WA. Matt is a pretty sharp cookie and was among the 'first tier' job candidates who was offered a position almost a year before he graduated.

His comment "...done with criminal intent" is, based on what I've learned in the time since, where every depositor with RF falls... remember the endless stories about cars soon to be shipped, cars being built, etc?

The text of Matt's message follows; his reference to 4684 was a pdf he filled out as an example. Just as in March of 2006, each one of us is ultimately on our own so be sure you get tax advice you can trust.

Best to all,

T.
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"Hey Dad –

I just spoke with some fellow tax preparers about your situation and came to the conclusion that you might be able to deduct the deposit amount as some sort of “investment loss” or “casualty and theft loss” but you may be pushing it. Given that the money was paid willingly, it can’t necessarily be considered theft – however “theft losses are deductible as casualty losses if they result from acts illegal under state law and done with criminal intent.”

Not sure how much this helps – but it’s something. Let me know if you have any follow up questions and hopefully I can get them answered for you.

I’ve attached Form 4684 – the casualty and loss worksheet – which flows to Line 19 on your 1040 (I think). The only issue you may have with deducting the amount is proving you actually had a basis in the property (deposit/car) when it was stolen, that is, if the auditors come knocking on your door.

-Matt"